Asian and European markets mostly dropped Wednesday after suffering a diabolical first quarter, with traders contemplating the prospect of lengthy lockdowns as the coronavirus continues its deadly sweep across the planet.
With the number of infected and dead still surging in Europe and the United States, hopes are fading that strict containment measures keeping billions of people at home will be lifted any time soon.
That in turn is stoking uncertainty about the outlook for the global economy, which is widely expected to slip into recession this year, while there are also concerns about how long any recovery will take.
Donald Trump said he was extending social distancing and stay-at-home orders for another 30 days to the end of the month, while members of his virus task force warned almost a quarter of a million Americans could die from the disease.
"The demand shock for oil and for the global economy more broadly will be more significant if mobility and social interaction restrictions stay in place beyond April," said AxiCorp's Stephen Innes.
"The real question for investors isn't how shockingly bad the first quarter is going to be -- sadly that's a given -- it's how long the weakness will persist and, as a consequence, how much permanent damage will be done." He added that "while the full effects of these disruptions are not yet evident, it is clear that the economy is experiencing the most abrupt and severe contraction since the Great Depression".
And Rodrigo Catril, of National Australia Bank, said in a note: "Overall, there seems to be an increasing risk that markets are underestimating the length containment measures will be implemented across the globe. China and now Italy are also showing that the removal of these containment measures will be slow."
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