Stock Market Crash and It Influence on Manufacturing Sector

Published on: March 11, 2020

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What is being referred to as Black Monday in the financial circle did not just happen out of the blue. It’s one of the consequences of the viral spread of COVID-19, which has affected not less than 100 countries with new countries joining the fray. We’ve also seen Italy, which is one of the worst-hit declaring a total lockdown of the country. Black Monday is the worst day in the financial world since the 2008 financial meltdown, all due to the fear of Coronavirus. The stock market experienced a carnage at the start of trading on March 9 that it requires a 15 minutes halting of trade to prevent further financial chaos.

All of the three indexes in the US, Dow Jones, Nasdaq, and the S&P experienced an average of 7% plunge in share value. This plunge marks an all-time low of these three indexes and the worst since 2008. As it is in the US, UK and Europe are not left out of the stock market crash. In London, there was a £125bn reduction in the value of major UK firms. This scenario is also being experienced in Spain, Germany, and France, with major indexes closing with an average of 7% reduction in stock value.

According to observers and financial experts, things are going to get worse until they get better. With the continuous spread of Covid-19 into new territories, the stock market may experience its worst period ever.

Concerns For The Manufacturing Sector

Long before the Black Monday, there have been concerns in the US manufacturing industry towards late 2019. Investors are worried about returns on their investment with the recession in the manufacturing industry. While the recession has succeeded in sending stocks lower in the manufacturing sector, the stock market crash may have turned the industry into tatters right now.

Even though recessions are an expected part of an economic cycle, the current stock market crash is doing more damage to the manufacturing sector. For an industry in dire need of intervention from the Feds and other sectors, this is not a good time for the US manufacturing sector. While Covid-19 may not do much damage to the US economy, the same cannot be said for the manufacturing sector.

Coronavirus is not affecting economies much as it is affecting people, and the manufacturing sector seems to one of those at the receiving end. The economic impact of Coronavirus is expected to cause more damage to already damaged manufacturing sectors not only in the United States but globally.

The Oil Price War and The Looming Recession

Just as Coronavirus is doing its damage to both humans and economies, the oil price war is also fueling the war on the global economies. Oil price went as low as $30 per barrel, marking one of its lowest prices in the last decade. Even though the price of oil is felt more in New York and London, the ripple effect is more evident in Asia, Africa, and other emerging economies. In reality, the current bloodbath being experienced across stock markets is both directly driven by Covid-19 and the oil price war.

Even though the reduction in oil price might signal lower gasoline prices to the end-users, it does not augur well for economies that rely hugely on oil revenue, including the United States. Just as there is carnage in stock indexes, investors in the energy sector also have sleepless nights. The price of Brent Crude oil went as low as $37 per barrel, the benchmark US crude oil also sank below $34. This also means that ExxonMobil, Chevron, and other oil giants are experiencing their worst moments since 2008.

The Bottomline

Even though the Coronavirus has eased in China where it first caused damage, it’s gaining momentum in Iran, Italy, UK, and South Korea. This has further increased the fear in the United States, which is already volatile due to the ripple effects of Coronavirus and oil price plunge.

It may take a while for things to get back to normal, as factories will continue to remain closed to contain the effects of the virus. Let’s hope the economy will not be in shambles by the time this epidemic is contained.

https://foreignpolicy.com/2020/03/09/coronavirus-economic-pandemic-impact-recession/
https://www.politico.com/news/2020/03/09/stocks-oil-plunge-over-global-fight-for-crude-production-124243
https://www.washingtonpost.com/business/2020/02/27/stock-market-dow-coronavirus/
https://www.washingtonpost.com/business/2020/02/27/stock-market-dow-coronavirus/

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