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Fall in Global Markets

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Global markets slump as investor unease persists.

Global markets fell sharply on Wednesday after a big Tuesday rally on Wall Street, as persistent worries about the world economy overcame hopes for a major stimulus package from Washington.

Futures markets signaled Wall Street would open sharply lower on Wednesday, too.

Major European markets were 4 to 5 percent lower, following a late-day slump in Asian shares. Futures for oil declined, with Brent crude priced below $30 a barrel for the first time since 2016. Gold fell, as did bond prices, signaling investors continued to retreat from a broad array of markets.

The significant drops represented a broad shift in sentiment on Wall Street from just hours earlier, when the White House called for urgent action to pump $1 trillion into the economy. The S&P stock index rose 6 percent on Tuesday.

Asian markets rose initially on Wednesday, but investors couldn’t sustain the momentum. Late in the day, the losses accelerated.

Australia’s S&P/ASX 200 index led the losses with a 6.4 percent drop. In South Korea, the Kospi index fell 4.9 percent. Hong Kong’s Hang Seng Index was down 4.2 percent.

In Japan, Tokyo’s Nikkei 225 index started up but ended 1.7 percent lower.

In mainland China, the Shanghai Composite Index fell 1.8 percent.

In early European trading, Germany’s DAX index opened 3.8 percent lower. London’s FTSE 100 index was down 3.7 percent. In France, the CAC 40 index was 2.6 percent lower.

The European Central Bank on Wednesday rejected statements by a member of its policymaking panel who had suggested the bank could not do any more to combat the coronavirus crisis.

“The E.C.B. stands ready to adjust all of its measures, as appropriate, should this be needed to safeguard liquidity conditions in the banking system and to ensure the smooth transmission of its monetary policy in all jurisdictions,” the bank said, in an unusual repudiation of one of its own officials.

The central bank was reacting to comments by Robert Holzmann, president of the Austrian National Bank, who is also a member of its own governing council.

In an interview published on Wednesday, Mr. Holzmann told the Vienna newspaper Der Standard that “monetary policy has reached its limits” and that it was up to governments to deal with the consequences of the crisis.

After the interview was published, Mr. Holzmann retracted those remarks. “Monetary policy is a long way from reaching its limits,” he said in a statement issued by the Austrian central bank.

The European Central Bank has been struggling with communication gaffes since its president, Christine Lagarde, made comments last week that were interpreted to mean that the bank would not protect a country like Italy should its borrowing costs rise to unsustainable levels.

Philippine financial markets were set to reopen on Thursday, after becoming the first to shut down because of the coronavirus outbreak.

The Philippine stock exchange, which shut on Tuesday, will keep reduced hours, it said in a statement. Other trading, in bonds and in foreign currencies, resumed on Wednesday.

Following an emergency meeting that ended late on Tuesday, the government of the Philippines decided to allow resumption of capital and money market trading with a lean work force.

Astro del Castillo, managing director of First Grade Finance Inc., said that many investors still remained wary about the uncertainty and retreated to the sidelines.

“But what is important is that we show we are open and operating. The stock market is an important component of the economy,” he said. “It is important that we get that going. Of course trading would remain volatile given the uncertainty.”

After suffering their worst day in decades, stocks bounced back on Tuesday as Washington policymakers talked up plans to try to cushion an economy careening toward a deep recession driven by the coronavirus outbreak.

The S&P 500 rose 6 percent, rebounding from a 12 percent collapse on Monday, which was its steepest drop since 1987.

Still, even if the financial system functions well, a daunting economic challenge continues to face the American economy, as the spread of the coronavirus forces federal, state and local officials to take simultaneous actions that will cut consumer spending. Such spending accounts for roughly 70 percent of American gross domestic product.

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Even as stocks gained, the trading on Tuesday reflected some of these concerns. The best performing parts of the market were traditionally defensive areas, such as the utilities and consumer staples, where investors typically hide out during trying economic times. Oil prices also fell.

Treasury Secretary Steven Mnuchin warned Republican senators on Tuesday that the unemployment rate in the United States could approach 20 percent without the intervention of robust economic stimulus measures, according to people familiar with the discussion.

The comments came while Mr. Mnuchin was making the White House’s pitch to lawmakers to back a $1 trillion fiscal stimulus package that would include $250 billion of checks being sent to Americans suffering from the fallout of the coronavirus epidemic.

Mr. Mnuchin said that the jobless rate could go up by 5, 10 or 15 percentage points if there is no intervention, according to two people familiar with his comments. The jobless rate currently sits at 3.5 percent.

Monica Crowley, a spokeswoman for Mr. Mnuchin, said that the Treasury secretary’s comments were not a projection and that because Congress was taking additional action, he did not believe the unemployment rate would reach 20 percent.

“During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case,” Ms. Crowley said in a statement.

Since World War II, the United States has never seen unemployment rise above 11 percent, the level it nearly reached in the recession of the early 1980s. It reached 10 percent, briefly, during the 2008 financial crisis.

The Trump administration has spoken with large technology companies about how their access to geolocation data from smartphones can aid in the response to the coronavirus pandemic.

At a recent meeting, a group of tech companies discussed the use of anonymous, aggregated geolocation data to respond to the spread of the virus with the White House and other administration officials, according to two people with knowledge of the matter. They also discussed how that would intersect with user privacy, the people said.

The Centers for Disease Control asked during the meeting about the prospect of using the data to track demand for hospitals around the country, which are expected to be deluged by patients, one of the people said. The conversations were first reported by The Washington Post.

Facebook has also discussed with the U.S. government the maps it produces to track disasters using satellite and census data, said a company spokesman, Andy Stone. It is also working to provide nonprofit groups — which can work with local, state and federal authorities — with a second set of mapping tools that use smartphone location data that Facebook users can choose to share.

The possible use of geolocation data raises questions about user privacy, especially as policymakers are increasingly asking about the power of major tech companies like Amazon, Facebook and Google.

But analysis of aggregated data would be different from aggressive measures to track individual patients using their phones. In Israel, for example, the government has moved to use cellphone data to retrace the steps of virus patients.

  • BMW of Germany became the last major European carmaker to shut down manufacturing in Europe, saying on Wednesday its factories would remain closed until April 19. The company will also stop production in South Africa. Toyota also said on Wednesday that it would close its European plants.

  • Facebook announced a $100 million grant program for small businesses around the world that are affected by the coronavirus outbreak. The company said in a blog post that it would begin accepting applications in the coming weeks.

Reporting and research were contributed by Jack Ewing, David McCabe, Cecilia Kang, Alan Rappeport, Nicholas Fandos, Jim Tankersley, Jason Gutierrez, Carlos Tejada, Kevin Granville and Daniel Victor.

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