Coronavirus fears continue to grip stocks: March 18, 2020

By CNN Business

Updated 12:42 PM ET, Thu March 19, 2020
6 Posts
Sort byDropdown arrow
8:50 a.m. ET, March 18, 2020

The strong US dollar is hammering the British pound

From CNN Business' Anneken Tappe

The US dollar has strengthened over the past weeks amid a credit squeeze. The dollar is the world's go-to funding currency, and investors and businesses are scrambling to shore of their reserves.

This has slammed the greenback's rivals, including the British pound, which has fallen below $1.20 and to its lowest level since the October 2016 flash crash.

One pound last bought $1.1851, down 1.7% on the day. If the currency drops further, it could tumble to its lowest level since 1985. Given how far it has fallen, it could make a bigger move toward $1.15, said Michael Hewson, chief market analyst at CMC Markets.

8:46 a.m. ET, March 18, 2020

JetBlue looks to defer new jets as it slashes schedule

From CNN Business' Chris Isidore

JetBlue Airways (JBLU) said it is in discussions with aircraft maker Airbus to delay payments and delivery of new jets as it adjusts to the plunge in air travel in the face of the coronavirus crisis.

The airline, which along with United Airlines was among the first to cut its domestic schedule because of the fall in traffic, said it will cut its schedule in April and May by 40% and it expects to make deep cuts in the June and July schedule as well. That's far deeper than the initial 5% cut in its schedule that it announced on March 4. But airlines has fallen sharply since then, prompting other airlines, such as United and Delta, to announce similar reductions in their schedule.

The airline industry is seeking a $50 billion federal bailout for passenger airlines and another $8 billion in help for cargo carriers. JetBlue said it supports that aid package, but that in the meantime it has arranged an a new $1 billion credit line.

"This is not free money – it’s a band-aid solution that holds us over and we have to pay it back with interest," said the airline. "Even with these cash reserves we, like the rest of the industry, will need significant government support to help us through these losses."

8:01 a.m. ET, March 18, 2020

The Fed is using its 'crisis-era playbook'

From CNN Business' Julia Horowitz

In recent days, the US Federal Reserve has pulled out the big guns to fight the fast-moving economic and financial shock caused by the coronavirus epidemic — cutting interest rates close to zero, ramping up asset purchases and easing capital rules to give banks more flexibility to extend credit to households and businesses.

The rapid series of interventions continued Tuesday, when the central bank invoked emergency powers to launch a new program that will seek to unfreeze a $1 trillion market that keeps America's economy moving.

What happened: The Fed said it will purchase commercial paper from highly rated borrowers. During normal times, businesses use the commercial paper market to easily get short-term loans to pay workers and finance inventories. 

But like other funding markets, there's been a breakdown in recent days, raising fears that coronavirus-ravaged companies would lose access to credit just as they need it most. That would have a cascading effect, forcing cash-strapped businesses to lay off workers and scrap spending plans.

"The commercial paper market has been under considerable strain in recent days as businesses and households face greater uncertainty in light of the coronavirus outbreak," the Fed said in a statement.

Crisis mode: The Fed took launched a similar rescue plan in 2008.

In a note to clients, Goldman Sachs' chief economist Jan Hatzius called the move a return to the "crisis-era playbook" — and predicted that more emergency measures to keep credit flowing could be on the way.

6:25 a.m. ET, March 18, 2020

GM, Ford and Fiat Chrysler will continue US production with new safety measures

From CNN Business' Vanessa Yurkevich and Peter Valdes-Dapena

The Big Three automakers in the United States will keep their factories in the country open for now — albeit with new restrictions in place to safeguard workers from the novel coronavirus.

Ford (F), General Motors (GM) and Fiat Chrysler Automobiles agreed Tuesday night to "rotating partial shutdowns" of their factories, according to United Auto Workers.

The union added that the automakers will also deep clean their facilities and equipment when workers swap shifts, and extend the length of time between shifts.

The announcement is a compromise between the union and the automakers. The UAW earlier called on the companies to shut down their US factories entirely for two weeks as a way to "safeguard our members, our families and our communities."

Read more here.

6:34 a.m. ET, March 18, 2020

US stock futures are plunging

The fear among investors about the novel coronavirus pandemic and its devastating impact isn't going away despite promises of massive government support for business.

US stock futures swung back into the red overnight after Wall Street's slight rebound. They hit their limit and stopped trading.

  • Dow (INDU) futures fell more than 800 points, or 3.9%, accelerating earlier losses after hours
  • S&P 500 (SPX) futures were down 3.7%
  • Nasdaq (COMP) futures declined 4.4%

US Treasury Secretary Steven Mnuchin is pushing for a $1 trillion economic stimulus designed to prevent the unemployment rate from soaring to 20%, a Republican Senate source told CNN.

Volatility across markets has created considerable anxiety amongst investors trying to gauge the effectiveness" of various healthcare, monetary and fiscal policy responses, wrote Bob Michele, global head of fixed Income at JP Morgan Asset Management, in a research note.

Read more here.

6:29 a.m. ET, March 18, 2020

Asian and European stocks are lower

US market jitters carried over to Asia Pacific during Wednesday trade.

  • Australia's S&P/ASX 200 closed down 6.4%, the worst performer in the region
  • South Korea's Kospi (KOSPIended the day down 4.9%

Other major regional indexes turned negative, erasing morning gains.

  • Japan's Nikkei 225 (N225finished down 1.7%
  • China's Shanghai Composite (SHCOMP) was last down 1.8%
  • Hong Kong's Hang Seng Index (HSI) was 4.2% lower as its losses accelerated rapidly toward the end of the day.

Europe was also lower.

  • Europe's STOXX 600 index was down 3.3% in early trading
  • Germany's DAX (DAX) was off 4.6%
  • France's CAC 40 (CAC40) has slid 3.6%
  • Britain's FTSE 100 was 3.3% lower