(AP) — The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments on Wednesday related to the global economy, the workplace and the spread of the virus.
THINGS WE VALUED: The outbreak has reshuffled the pecking order of what holds value and there are few places where that is more evident than oil.
Over the last quarter the price of crude has fallen harder than at any point in history, plunging almost 70%, to around $20 per barrel. Those are levels not seen since 2002.
During a press conference, President Donald Trump bemoaned the oil war that has broken out between Saudi Arabia and Russia, which has hastened the decline. Trump said he spoke this week with Russian President Vladimir Putin, and that he has also spoken with Saudi Crown Prince Mohammed bin Salman.
“There’s so much oil,” Trump said. “In some cases, it’s probably less valuable than water.”
With millions of job losses expected already because of the pandemic, a shock to the energy sector would mean thousands of jobs lost.
On Wednesday Whiting Petroleum, one of the biggest frackers in the Bakken shale formation, sought Chapter 11 bankruptcy protection. Energy producers were already suffering and there have been 208 bankruptcy filings in the past five years after racking up $121.7 billion in debt, according to law firm Haynes and Boone. Few expect Whiting will be the last to file for protection during the pandemic.
TROUBLED HOME: Any activity requiring proximity to another human is being cut out. If you are trying to sell a house, that includes you.
Mortgage applications tumbled 24% compared with the same week last year as showings are all but shut down. Last week, that year-over-year figure fell 11%, though applications to refinance are soaring.
“Mortgage rates and applications continue to experience significant volatility from the economic and financial market uncertainty caused by the coronavirus crisis,” said Joel Kan, MBA’s associated vice president for economic forecasting.
CAR CRASH: Auto sales are evaporating with people on every continent shutting in, and certainly not haggling on car lots.
On Wednesday, Fiat Chrysler, which only reports quarterly numbers, said its U.S. sales fell 10%. Hyundai reported that March sales fell 43% and sales for the quarter dropped 11%.
Auto makers will report sales throughout the day. The Edmunds.com auto pricing site expects March sales to fall more than 35% from a year ago.
Quarterly sales are expected to fall about 12% despite a strong start to the year before the virus took root in the United States.
“The market took a dramatic turn in mid-March as more cities and states began to implement stay-at-home policies,” said Jessica Caldwell, director of insights for Edmunds.
DID NOT EXPECT THAT: The pandemic has delivered unforeseen consequences, good and bad, for business across almost every sector.
The U.S. is among the countries unable to deliver enough tests for the coronavirus. A number of diagnostic companies, including Quest Diagnostics, have become critical in tracking its spread.
But COVID-19, the disease caused by the coronavirus, is doing more harm to the New Jersey company than good, despite its essential role.
Quest expects its overall testing volumes to decline as other types of testing plunge. The company reported a testing volume decline exceeding 40% during the last two weeks of March, including COVID—19 testing. The reason is that visits to the doctor and elective medical procedures have almost come to a halt.
While occupancy rates at all major hotels has tumbled, Airbnb is reporting growth in long-term stays in peoples’ hometowns, with families seeking more space and a housing critical for medical workers near hospitals. Such bookings have doubled in the past two weeks, according to the San Francisco company.
BAD NEWS: News Corp. is suspending printing operations for 60 local papers in Australia, where it is the biggest media group, as advertising revenue vanishes. Local newspapers in New South Wales, Victoria, Queensland and South Australia will be digital-only from next week. The newspapers depend heavily on advertising related to real estate auctions, house inspections, community events and restaurants — all of which have been closed.
MARKETS: Stocks tumbled, with losses on the Dow nearing 1,000, after Trump told the country to brace for “the roughest two or three weeks we’ve ever had in our country.” The selling was widespread, and all 11 sectors that make up the S&P 500 fell.