New US interest rate cut and more countries closing borders contribute to global markets collapse this Monday
That Monday at 3:01 pm, the Ibovespa (B3), the main stock exchange index, fell 13.56%, to 71,469 points. Earlier, it had a drop of more than 14%, retreating 70,855 points. And it had its business interrupted right after its opening.
In addition to the coronavirus pandemic, doubts in global markets about the effectiveness of the measures announced by the Federal Reserve (FED) and other central banks are also contributing to the falls in stock markets around the world.
This morning, at 10:24 am, when the index registered a drop of 12.53%, the “circuit breaker” was activated – the B3 mechanism that interrupts all negotiations for 30 minutes when the drop reaches a total of 10%. If the drop reaches 15% during the day, trading is stopped again, and in this case for 1 hour.
Even before the trading session opened, the Ibovespa futures contract was already down 10%, already signaling that a new “circuit breaker” would happen. It was the 5th time in 6 sessions that trading was interrupted on the Ibovespa.
Biggest falls of the day
Airlines were among the most affected companies among Ibovespa stocks. Due to the effect of the pandemic, the travel sector is coming to a halt. And it also adds up to contribute to the loss, the high dollar. Blue at a low of 24,28% and Gol losing 18,89%. CVC Brasil fell 23.45% and Petrobras fell 13.44%.
Last Friday (13), the Ibovespa closed at a high of 13.91%, at 82,677 points. In the week, there was an accumulated drop of 15.68% – the worst weekly performance since October 2008. In this year, 2020, the accumulated loss on the Stock Exchange already reaches 35%.
external scenario
The Federal Reserve (Fed, central bank of the United States) announced the day before, this Sunday, the reduction of the interest rate in the United States to the range of 0% to 0.25%, which generated aggravation of fears about the size of the economic impact of the pandemic . It was the second rate cut in less than two weeks. The institution also announced a purchase program of US$ 500 billion in Treasury bonds and US$ 200 billion in mortgage securities.
The dollar on the day operates at a strong high, hitting R$ 4.98 at the opening.
