Global Financial Market 'Pandemic Shock'

COVID-19 Sparks End of 11-Year Bull Market in US Stocks
Dow Falls 5.86%... Monthly Decline Reaches 20.3%
Investor Fear Grows Amid Doubts Over Trump Stimulus Plan

[Asia Economy New York=Correspondents Baek Jong-min and Lee Min-woo] Global stock markets have fallen into panic once again. The U.S. New York stock market has ended the bull market that lasted for 11 years since the 2008 global financial crisis. Asian stock markets, including South Korea, also plunged sharply due to the declaration of the COVID-19 pandemic and the decline in the U.S. stock market.

According to the Korea Exchange on the 12th, as of 11:36 a.m., the KOSPI recorded 1,834.20, down 3.88% (74.07 points) from the previous day. On the Korea Stock Exchange, foreigners sold a net 518.9 billion won, marking six consecutive trading days of net selling since the 5th. The scale of foreign selling in the Korean stock market has exceeded 5 trillion won this month alone. The KOSDAQ also fell 4.35% (25.90 points) to 569.71 compared to the previous day.

Major Asian stock markets continue to plunge. Japan’s Nikkei 225 index opened down 1.68% and briefly broke below the psychological support level of 19,000 during the session. After President Trump announced COVID-19 response measures, the decline widened to the high 3% range. Australia’s S&P/ASX 200 index fell 4% in the morning, increasing its losses after entering a bear market. Despite announcing a stimulus package worth approximately 13.6 trillion won to mitigate the economic impact of COVID-19, it was deemed insufficient to calm market anxiety. China’s Shanghai Composite Index started down 1.09%.

The Dow Jones Industrial Average closed at 23,553.22 on the 11th (local time), down 5.86% (1,464.94 points). The Dow reached its peak of 29,551 on the 12th of last month but has fallen 20.3% in just one month. In the stock market, a 20% drop from the peak is generally considered entry into a bear market. On the same day, the Standard & Poor’s (S&P) 500 index closed at 2,741.38, down 140.85 points (4.89%), and the tech-heavy Nasdaq fell 392.20 points (4.7%) to 7,952.05. The S&P 500 index fell 20% from its intraday high, effectively marking the official end of the bull run for blue-chip U.S. stocks.

The stock price decline was decisively influenced by the World Health Organization (WHO) declaring COVID-19 a 'pandemic.' A significant portion of the Dow’s 1,464.94-point drop occurred after the pandemic declaration, delivering a 'counter punch' to investor sentiment. Additionally, skepticism about the feasibility of the economic stimulus package being prepared by the Trump administration further intensified investors’ fears.

The Wall Street Journal (WSJ) reported, "The longest bull market in U.S. history has ended." Bloomberg News described it as "ending in chaos just as unpredictably as it began." This reflects how the situation reversed sharply within two months after the U.S.-China Phase One trade agreement in January, which had raised expectations for further gains. WSJ also quoted a New York Stock Exchange trader with 35 years of experience saying, "Health and life issues inevitably eat away at the mind."

By sector, industrial stocks fell 5.95%, and financial stocks also dropped 5.52%. As the situation worsened, the U.S. government and the Federal Reserve (Fed) acted urgently. President Trump met with Wall Street CEOs to calm fears, and the Fed increased the overnight repurchase agreement (Repo) operation limit from $150 billion to $175 billion for the day. The Fed had raised the overnight Repo limit to $150 billion on the 9th, and increased it again just two days later. The Fed also decided to conduct three new operations of one-month term Repos, each with a $50 billion limit, to increase liquidity supply in the short-term funding market.

On the same day, investment bank Goldman Sachs warned that the S&P 500 index could fall an additional 15% due to the impact of COVID-19 as of the 10th. Analysts see further corrections as inevitable amid the seemingly endless fear.

This content was produced with the assistance of AI translation services.