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Global stocks sink after Trump promises virus aid

People are reflected on the electronic board of a securities firm in Tokyo, Wednesday, March 18, 2020. Major Asian stock markets are higher after Wall Street rallied on President Donald Trump's promise to prop up the economy through the coronavirus outbreak. (AP Photo/Koji Sasahara)

BEIJING (AP) — Global stock markets sank Wednesday in a third day of wild price swings after President Donald Trump promised aid to get the U.S. economy through the coronavirus outbreak.

London and Frankfurt opened more than 3% lower and Shanghai, Tokyo and Hong Kong all declined. Australia’s main index fell 6.4%.

The White House proposal could approach $1 trillion in spending to ward off the pressure of business closures to contain the virus. The Federal Reserve has announced more measures to keep financial markets operating.

Treasury Secretary Steven Mnuchin said Trump wants to send checks to Americans in the next two weeks to help support them while more parts of the economy come closer to shutting down.

On Wall Street, the future for the benchmark S&P 500 index was down 3.7%. The future for the Dow Jones Industrial Average was off 3.9%.

On Tuesday, the S&P rose by an unusually wide daily margin of 6%, regaining just under half the previous day’s history-making loss. The Dow advanced 5.2%.

Investors expect more volatility until the virus is brought under control.

Trump’s proposal would include $250 billion for small businesses and $50 billion for airlines.

That is a good start but investors need to see the number of infections slow before markets can find a bottom, analysts said. The number of new cases reported in China, where the virus emerged in December, is declining but infections in the United States, Europe and elsewhere are increasing.

There are “green shoots of risk appetite emerging, and some further concerning aspects,” said Chris Weston of Pepperstone Group in a report. “I am not going to call a bottom in the risk story by any means.”

The FTSE 100 in London dropped 4.3% to 5,066.96 and Frankfurt’s DAX skidded 3.7% to 8,606.79. France’s CAC 40 shed 3.4% to 3,873.71.

On Tuesday, European markets swung from gains to losses and back to gains.

In Asia, the Shanghai Composite Index fell 1.8% to 2,728.76 while the Nikkei 225 in Tokyo shed 1.7% to 16,726.55. Hong Kong’s Hang Seng skidded 4.2% to 22,291.82.

The Kospi in Seoul slumped 4.9% to 1,693.95. Australia’s S&P-ASX 200 plunged to 5,320.20.

New Zealand and Singapore rose 1% while Manila fell 7.9%. Bangkok surged 2.8%.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.

On Monday, the Dow lost nearly 3,000 points after Trump said a recession may be on the way. The S&P is off 25.3% from last month’s record.

The virus has spread so quickly that its effects haven’t shown up in much U.S. economic data yet.

On Tuesday, a report showed retail sales weakened in February, when economists expected a gain. A separate report a day earlier showed manufacturing in the state of New York contracting.

“The global recession is here and now,” S&P Global economists wrote in a report Tuesday.

In energy markets, U.S. benchmark crude lost 87 cents to $26.08 per barrel in electronic trading on the New York Mercantile Exchange. It lost $1.75 to $26.95 on Tuesday.

Brent crude, the international standard, fell 43 cents to $28.25 per barrel in London.

The dollar declined to 107.42 yen from 107.67 late Tuesday. The euro retreated to $1.0983 from $1.0996.