- Energy and travel stocks suffered the most as oil prices fell sharply.
- Share prices rose amid hopes that the economy could recover after measures to control and prevent coronavirus infection were relaxed.
- The unemployment rate could remain above 9 percent by the end of this year.
Economic markets worldwide are in a slump due to concerns over the impact of an increase in coronavirus infections on the economy. World markets have fallen after the US Federal Reserve warned that the US economy could take a long time to recover. Financial indicators have seen some of the worst days since March.
The Dow Jones Industrial Average fell nearly 7 percent. Energy and travel stocks suffered the most as oil prices fell sharply. Earlier, European and Asian stock markets had declined. The UK’s FTSE 100 is down about 4 percent. Germany’s DAX fell 4.4 percent and France’s CAC 40 fell 4.4 percent.
Share prices rose amid hopes that the economy could recover after measures to control and prevent coronavirus infection were relaxed. The Nasdaq hit a new high last week after a surprising report that U.S. employers began hiring workers in May.
However, the cautious improvement was short. The US Department of Labor said on Thursday that an additional 1.5 million people had applied for unemployment benefits last week. More than 30 million people are availing of the facility.
According to banking policymakers on Wednesday, the unemployment rate could remain above 9 percent by the end of this year. Many U.S. states have opened businesses, and states including Arizona and California have seen an increase in coronavirus infections in recent days. The Dow fell 6.9 percent, while the Nasdaq fell 5.2 percent.
US Treasury Secretary Steven Mnuchin said he did not want to see the lockdown re-imposed. Lockdowns paralyzed the world’s largest economy for weeks this spring. The head of the World Bank has called the coronavirus epidemic a deadly blow to the global economy, and said it has affected the livelihoods of billions of people. David Malpass called on governments to build new systems to restore growth.
He said the economic impact of the virus could last for a decade. Earlier in May, he said the coronavirus had pushed 60 million people into extreme poverty. According to the World Bank, the poorest people are forced to live on less than two US dollars a day.
Malpass said that those who could not bear the impact would be most affected. He said that he was confident that life and livelihood could be restored if the right plan was implemented.
He said such schemes provide relief to poor countries and government assistance to high-risk people. The World Bank says it is helping the most affected countries, but more needs to be done.
He also urged commercial lenders such as banks and pension funds to provide credit relief to poor countries. Malpass also said that it would be easier for other investors to invest in such an economy if the terms of the loan were made clear.
The World Bank says government support is needed to boost the private sector to rebuild economies. He said that in order to restore prosperity, new employment opportunities should be created instead of areas that may have lost their jobs permanently, like tourism.