Black Thursday (2020)

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Black Thursday
DowJones2020crash.png
The value of the Dow Jones hit an all-time high in February 2020, and then crashed in late February through March 2020.
DateMarch 12, 2020
Type Stock market crash
Cause

Black Thursday [1] was a global stock market crash on March 12, 2020, as part of the greater 2020 stock market crash. US stock markets suffered from the greatest single-day percentage fall since the 1987 stock market crash. [2] Following Black Monday three days earlier, Black Thursday was attributed to the 2019–20 coronavirus pandemic and a lack of investor confidence in US President Donald Trump after he declared a 30-day travel ban against the Schengen Area. [3] Additionally, the European Central Bank, under the lead of Christine Lagarde, decided to not cut interest rates despite market expectations, [4] leading to a drop in S&P 500 futures of more than 200 points in less than an hour. [5]

Contents

Background

On March 11, 2020, the Dow Jones Industrial Average ended an 11-year bull market run and entered a bear market. Symbolic statues from the Frankfurt Stock Exchange pictured. Bulle und Bar Frankfurt.jpg
On March 11, 2020, the Dow Jones Industrial Average ended an 11-year bull market run and entered a bear market. Symbolic statues from the Frankfurt Stock Exchange pictured.

On March 9, 2009, the stock market hit its lowest close during the Great Recession. [6] Since then, the US stock market was a bull market and held an 11-year streak despite serious economic challenges such as the China–United States trade war, the European debt crisis, Brexit, and oil-price conflicts. [7] The stock market became extremely volatile starting on Monday, February 24, 2020, when the Dow Jones Industrial Average and FTSE 100 dropped more than 3% as the coronavirus-pandemic spread worsened substantially outside China over the weekend. [8] [9]

On March 9, 2020, known as "Black Monday", global stock markets suffered from the greatest fall since 2008, during the Great Recession. [10] The crash was caused by a combination of the coronavirus pandemic and the Russia–Saudi Arabia oil price war. [11] [12] In the United States, a circuit breaker was triggered after stocks dropped sharply, halting trade for fifteen minutes. [11]

On March 11, 2020, the Dow Jones Industrial Average entered a bear market (i.e., 20% drop from the most recent peak) after an 11-year bull market run. [13]

United States presidential address

President Donald Trump addresses the nation from the Oval Office. Presidential Address by Donald Trump on March 11, 2020.png
President Donald Trump addresses the nation from the Oval Office.

On March 11, US president Donald Trump gave a public address. According to one writer for Barron's, "Dow futures were up around 300 points before the president’s address began. And then the president started talking—and futures started falling." [14]

In the speech, the president announced a temporary 30-day travel ban against Europe in response to the coronavirus pandemic. Although Trump initially stated that the ban would include all goods and passengers from Europe, the details of the travel ban were later clarified: the ban affects people who are not US citizens who in the past two weeks visited the 26-member Schengen Area, but does not include trade goods and cargo. The travel ban initially excluded the United Kingdom and Republic of Ireland but were later added to the list of prohibited countries. Trump did not consult the European Union before imposing the travel ban. [15] Carmen Reinicke of Business Insider wrote that Trump's address to the nation "failed to calm investors' concerns about the economic fallout from the coronavirus outbreak". [16]

Crash

The US's Dow Jones Industrial Average and S&P 500 Index suffered from the greatest single-day percentage fall since the 1987 stock market crash, as did the UK's FTSE 100, which fell 10.87%. [17] [2] The Canadian S&P/TSX Composite Index dropped 12%, its largest one-day drop since 1940. [18] The FTSE MIB Italian index closed with a −16.92% loss, the worst in its history. [19] Germany's DAX fell 12.24% and France's CAC 12.28%. [20] In Brazil, the Ibovespa plummeted 14.78%, after trading in the B3 was halted twice within the intraday; it also moved below the 70,000 mark before closing above it. [21] [22] March 12 was the second time, following the March 9 drop, that the 7%-drop circuit breaker was triggered since being implemented in 2013. [3]

In Colombia, the peso set an all-time low against the U.S. dollar, when it traded above 4000 pesos for the first time on record. [23] [24] The Mexican peso also set an all-time record low against the U.S. dollar, trading at 22.99 pesos. [25] The cryptocurrency Bitcoin dropped 40%, its worst day in 7 years. [26] Other cryptocurrencies fell sharply as well. [27]

United States

Largest Dow daily point losses up to Black Thursday
Rank
(by Net)		DateCloseChange Ref
Net%
1Black Thursday 2020-03-1221,200.62−2,352.62 −10.0 [28]
2 Black Monday 2020-03-09[ discuss ]23,851.02−2,013.76−7.8 [29]
32020-03-1123,553.22−1,464.94−5.9 [30]
42020-02-2725,766.64−1,190.95−4.4 [31]
52018-02-0524,345.75−1,175.21−4.6 [32]

Soon after trading began, a Level-1 trading curb was triggered on major US stock markets due to increased selling, leading to a 15-minute halt on trading. [16] Level-1 circuit breaker is triggered with a fall of 7% on the S&P 500 Index. The trading halt occurred after the markets reached a drop of 7.2 percent within 15 minutes. The crash temporarily recovered after the Federal Reserve Bank of New York offered at least $1.5 trillion worth of short-term loans to banks for March 12–13, but the market quickly resumed its decline soon after. [33] The Dow fell 2,353 points, [34] losing all of its gains from its lowest point in 2018. [35] The drop surpassed Black Monday, which occurred just a few days before, to be the greatest single-day point drop ever, at 2,353 points. [36] Together with the drops of 1,191 and 1,465 points on February 27 and March 11, the four largest Dow daily losses up to Black Thursday were all linked to the 2019–20 coronavirus pandemic. [28] [29] [30] [31] President Trump reacted to the crash by defending his travel ban and predicting that the stock market would eventually recover with central bank intervention. [37]

Aftermath

The following day, the S&P 500 showed some rebound, rising 9% in its best day since 2008 due to president Trump's declaration of a National emergency. More is unknown at this time with increasing market volatility. [38]

See also

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Black Monday (2020) Stock market crash of Monday, 9 March 2020

Black Monday was a global stock market crash on 9 March 2020 that occurred during the 2020 stock market crash. Markets opened several percent lower, having fallen greatly during the preceding two weeks. Global stock markets suffered from the greatest single-day fall since 2008, during the Great Recession. This record crash was soon surpassed three days later on Black Thursday. Notable contributing factors included the COVID-19 pandemic and the Russia–Saudi Arabia oil price war.

2020 Russia–Saudi Arabia oil price war

On 8 March 2020, Saudi Arabia initiated a price war with Russia, triggering a major fall in the price of oil, with US oil prices falling by 34%, crude oil falling by 26%, and brent oil falling by 24%. The price war was triggered by a breakup in dialogue between the Organization of the Petroleum Exporting Countries and Russia over proposed oil production cuts in the midst of the 2019–20 coronavirus pandemic. Oil prices had already fallen 30% since the start of the year due to a drop in demand. The fall in prices was one of the causes of the global stock market crash on 9 March 2020, colloquially known as Black Monday.

2020 stock market crash Stock market crash in 2020

The 2020 stock market crash is a global stock market crash that began in February 2020 during the 2019–20 coronavirus pandemic. The Dow Jones Industrial Average, S&P 500 Index and the NASDAQ-100 all fell into a correction on 27 February during one of the worst trading weeks since the financial crisis of 2007–08. Markets over the following week became extremely volatile, with swings of 3% or more being made per daily session. On 9 March, all three Wall Street indices fell more than 7% and most global markets reported severe contractions, mainly in response to the Russia–Saudi Arabia oil price war. This became colloquially known as Black Monday, and was the worst drop since the Great Recession in 2008. Three days after Black Monday there was another drop, Black Thursday, where stocks across Europe and North America fell more than 9%. Wall Street experienced its largest single-day percentage drop since Black Monday in 1987, and the FTSE MIB of the Borsa Italiana fell nearly 17%, becoming the worst-hit market during Black Thursday.

March 2020 Oval Office Address

The March 2020 Oval Office Address, officially titled On the Coronavirus Pandemic, was the second Oval Office address delivered during the presidency of Donald Trump. It was released in the wake of the rapidly spreading 2019–20 coronavirus pandemic, Black Monday, and in the wake of the ongoing 2020 stock market crash.

Economic turmoil associated with the 2019–20 coronavirus pandemic has wide-ranging and severe impacts upon financial markets, including stock, bond, and commodity markets. Major events included the Russia–Saudi Arabia oil price war that resulted in a collapse of crude oil prices and a stock market crash the week of 9 March 2020. The effects upon markets are among the many socio-economic impacts of the pandemic.

References

  1. ↑ For an explanation regarding the title "Black Thursday", see:
    • "Black Thursday: Dow Suffers Biggest Point Drop Ever, as Disney and Apple Fall Hard". Yahoo . March 12, 2020. Retrieved March 12, 2020.
    • Dumlao-Abadilla, Doris (March 12, 2020). "Black Thursday: PSEi sees worst freefall in 12 years". Philippine Daily Inquirer . Retrieved March 12, 2020.
    • Ananda, Jonathan (March 12, 2020). "Pandemic pandemonium: World markets crash into bear country on Black Thursday". The New Indian Express . Retrieved March 12, 2020.
    • Lopez, Jonathan (March 12, 2020). "Europe crude, petchems prices extend losses as stocks suffer 'Black Thursday'". Independent Commodity Intelligence Services. Retrieved March 12, 2020.
    • Culp, Stephen (March 12, 2020). "Black Thursday: Wall Street stocks plunge 10% in worst one-day loss in 32 years". AM New York Metro. Retrieved March 13, 2020.
  2. 1 2 Imbert, Fred; Franck, Thomas (March 12, 2020). "Dow drops more than 8%, heads for biggest one-day plunge since 1987 market crash". CNBC . Retrieved March 12, 2020.
  3. 1 2 Barnes, Brooks; Ewing, Jack; Goodman, Peter S.; Tankersley, Jim; Koblin, John; Hsu, Tiffany; Smialek, Jeanna; McKenna, Kevin; Reed, Stanley; Bradsher, Keith; Alderman, Liz; Stevenson, Alexandra; Kwai, Isabella; Bradsher, Keith; Perlroth, Nicole; Goldstein, Matthew; Abdul, Geneva; Tejada, Carlos (March 12, 2020). "Stocks Plunge as Trump's Travel Ban Adds to Distress: Live Updates". The New York Times . Retrieved March 12, 2020.
  4. ↑ Amaro, Silvia (March 12, 2020). "ECB surprises markets by not cutting rates, but announces stimulus to fight coronavirus impact". CNBC . Retrieved March 13, 2020.
  5. ↑ Zabelin, Dimitri (March 12, 2020). "ECB rate decision, Lagarde outlook: What to expect". DailyFX . Retrieved March 13, 2020.
  6. ↑ Williams, Sean (March 10, 2020). "Stock Market Crash 2020: Everything You Need to Know". The Motley Fool . Retrieved March 12, 2020.
  7. ↑ Williams, Sean (March 12, 2020). "RIP to the Longest Bull Market in History (2009-2020)". The Motley Fool . Retrieved March 12, 2020.
  8. ↑ Hussain, Samira (February 24, 2020). "Global stock markets plunge on coronavirus fears". BBC. Archived from the original on February 25, 2020. Retrieved February 25, 2020.
  9. ↑ Imbert, Fred; Huang, Eustance (February 27, 2020). "Dow falls 350 points Friday to cap the worst week for Wall Street since the financial crisis". CNBC. Archived from the original on February 28, 2020. Retrieved February 28, 2020.
  10. ↑ Partington, Richard; Wearden, Graeme (March 9, 2020). "Global stock markets post biggest falls since 2008 financial crisis". The Guardian . Retrieved March 12, 2020.
  11. 1 2 "Black Monday: Shares face biggest fall since financial crisis". BBC News. March 9, 2020. Archived from the original on March 9, 2020. Retrieved March 9, 2020. Analysts described the market reaction as "utter carnage".
  12. ↑ Li, Yun (March 8, 2020). "Dow sinks 2,000 points in worst day since 2008, S&P 500 drops more than 7%". CNBC. Archived from the original on March 9, 2020. Retrieved March 10, 2020.
  13. ↑ "Dow closes in bear market amid volatile session". Fox Business . March 11, 2020. Retrieved March 11, 2020.
  14. ↑ Levisohn, Ben. "Why President Donald Trump's Speech Spooked the Stock Market". www.barrons.com.
  15. ↑ Specia, Megan (March 12, 2020). "What You Need to Know About Trump's European Travel Ban". The New York Times . Retrieved March 12, 2020.
  16. 1 2 Reinicke, Carmen (March 12, 2020). "Dow slips 2,000 points as Trump coronavirus response disappoints, Fed funding boost fades". Market Insider . Retrieved March 12, 2020.
  17. ↑ "Coronavirus: FTSE 100, Dow, S&P 500 in worst day since 1987". BBC.com. March 12, 2020. Retrieved March 13, 2020.
  18. ↑ "Canadian stock market bloodbath: Worst one-day fall in 80 years". Toronto Star . March 12, 2020. Retrieved March 12, 2020.
  19. ↑ "Borse, Piazza Affari chiude a -16,92%. E' il peggior crollo di sempre". Affaritaliani.it (in Italian). March 12, 2020. Retrieved March 12, 2020.
  20. ↑ "European Markets Plummet On Trump's Travel Ban". Nasdaq.com. RTTNews. March 12, 2020. Retrieved March 13, 2020.
  21. ↑ "Ibovespa ameniza queda e recua 14% após anúncio de estímulos do Fed; dólar sobe a R$ 4,84". InfoMoney (in Portuguese). March 12, 2020. Retrieved March 12, 2020.
  22. ↑ "Ibovespa cai 14,8% e tem seu pior pregão desde 1998; dólar sobe a R$ 4,78". InfoMoney (in Portuguese). March 12, 2020. Retrieved March 12, 2020.
  23. ↑ "Colombia's central bank holds extraordinary meeting amid sharp fall in peso". Reuters. March 12, 2020. Retrieved March 12, 2020.
  24. ↑ Radio, Caracol (March 12, 2020). "Dólar en Colombia alcanzó este jueves una cifra histórica de $4.034". Caracol Radio (in Spanish). Retrieved March 12, 2020.
  25. ↑ "Dólar alcanza máximo histórico de 22.98 pesos en la madrugada". El Universal (in Spanish). March 12, 2020. Retrieved March 12, 2020.
  26. ↑ "Down 26%: Bitcoin Sees Worst Sell-Off in 7 Years as Coronavirus Spurs Flight to Safety". CoinDesk. March 12, 2020. Retrieved March 12, 2020.
  27. ↑ Bambrough, Billy. "Crypto Carnage Wipes Out 2020 Gains For Bitcoin, Ethereum, Ripple's XRP, Litecoin, And Bitcoin Cash". Forbes . Retrieved March 12, 2020.
  28. 1 2 "Dow Jones Dives 2,000 Points; 9 Components Fall 10%+ As Coronavirus Spreads In U.S." Investors.com. March 12, 2020. Retrieved March 12, 2020.
  29. 1 2 "Dow sinks 2,000 points in worst day since 2008, S&P 500 drops more than 7%". CNBC. March 9, 2020. Retrieved March 12, 2020.
  30. 1 2 "Dow drops 1,400 points and tumbles into a bear market, down 20% from last month's record close". CNBC. March 11, 2020. Retrieved March 11, 2020.
  31. 1 2 "Dow Jones drops nearly 1,200 points, biggest point decline ever". krcrtv.com. February 27, 2020. Retrieved February 27, 2020.
  32. ↑ Wang, Lu; Wittenstein, Jeran (February 5, 2018). "Bad Day Turns Terrifying With the Dow's Dramatic Drop". Bloomberg News . Archived from the original on February 6, 2018. Retrieved February 5, 2018.
  33. ↑ "Stocks Continue Tumble Even After Fed Steps In: Live Updates". The New York Times . March 12, 2020. Retrieved March 12, 2020.
  34. ↑ McCabe, Caitlin; Ostroff, Caitlin (March 12, 2020). "Stocks Plunge 10% in Dow's Worst Day Since 1987". Wall Street Journal. ISSN   0099-9660 . Retrieved March 13, 2020.
  35. ↑ Arancibia, Juan (March 12, 2020). "Stocks Off Session Lows; Dow Wipes Out All Gains From 2018 Low". investors.com. Retrieved March 12, 2020.
  36. ↑ Imbert, Pippa Stevens,Maggie Fitzgerald,Fred (March 12, 2020). "Stock market live Thursday: Dow tanks 2,300 in worst day since Black Monday, S&P 500 bear market". CNBC. Retrieved March 13, 2020.
  37. ↑ Naylor, Brian; Rampton, Roberta (March 12, 2020). "Trump Defends Travel Ban, Says Stock Market Will Bounce Back". NPR . Retrieved March 12, 2020.
  38. ↑ Times, The New York (March 13, 2020). "Stocks Rally as Trump and Business Leaders Pledge Support" – via NYTimes.com.
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