Hits taken on global markets
After a brief rally on March 18, equity indices in the UK and US resumed their steep downward slides as doubts appeared to grow over the effectiveness of government stimulus measures.
In New York, the stock exchange was again forced into a trading halt after the S&P500 plunged by seven per cent, triggering an automatic “circuit breaker”. The drop continued when trading resumed and, by early afternoon local time, it was down 8.2 per cent. The benchmark FTSE 100 in London closed four per cent down overnight.
The price of crude oil is taking its cue from the economic crisis and weakening demand, with West Texas Intermediate falling below US$23 a barrel.
In its morning advisory note, the ASB Bank described the situation as “very ugly”. “Extreme risk aversion has once again gripped markets over the past 24 hours. Price action is panicked, liquidity in some markets is strained and moves have been extraordinary."
The VIX index of risk aversion is now higher than it was in the global financial crisis when it peaked at 80.86 in November 2008.
Renault and Rolls-Royce pull the plug
The coronavirus pandemic has seen Groupe Renault halt on production in France until further notice to protect its employees and to comply with French government measures. The suspensions, which came in on March 16, cover 12 sites and 18,000 employees across the country, while production has also been halted at its plants in Spain, Slovenia and Morocco.
Group Renault plans to restart production activities as soon as conditions permit and will implement appropriate measures to respond effectively to commercial demand.
Meanwhile, Rolls-Royce Motor Cars is halting production at its Goodwood plant in the UK. Assembly-line work there will be suspended for two weeks from March 23 “to further secure the health and welfare of the employees”.
This suspension will be followed by an already-planned two-week Easter maintenance shutdown. Day-to-day operations will be assured by non-production employees remaining at work at its head office or working from home on a rotational basis.
