Stock markets were largely subdued Thursday after days of massive volatility, as investors digested new financial support measures, including the European Central Bank’s promise to funnel more than $1 trillion Cdn into the economy.

Market sentiment appeared fragile as investors rushed to convert holdings to cash, bracing for a prolonged coronavirus-induced recession.

After opening higher, European stocks were trading lower, with Germany’s DAX shedding 0.7 per cent to 8,386.11. The CAC 40 in Paris fell 0.4 per cent to 3,738.37. Britain’s FTSE 100 fell 1.5 per cent to 5,006.56.

The Dow Jones industrial average and the Toronto Stock Exchange’s benchmark index were each down by between one and three per cent in early trading, but nearing late morning both had eked out tiny gains of about one per cent.

Even those tiny gains are a welcome relief to investors who have seen little besides precipitous falls in recent weeks. Signs that the outbreak’s impact will be far-reaching and prolonged have undermined efforts to staunch the bloodletting on the markets.

Even prices for investments seen as very safe, like government bonds, have been slumping as investors rush to raise cash.

“It’s amazing how desensitized we’ve become to central banks’ dropping huge numbers and massive amounts of cash in the markets’ laps,” Stephen Innes of AxiCorp said in a commentary.

The losses followed a more than 1,300 point, or 6.3 per cent, decline Wednesday in the Dow Jones Industrial Average, which has now given up nearly all of its gains since U.S. President Donald Trump was elected in 2016.

The TSX, largely because the battering that its many oil companies have taken, has lost more than a third of its value in a matter of weeks.

The New York Stock Exchange said late Wednesday it will temporarily close its iconic trading floor in lower Manhattan and move to all-electronic trading beginning Monday as a precautionary step amid the coronavirus outbreak.

Oil price plunging

The price of oil fell below $21 US per barrel for the first time since 2002. On Thursday, the price of the U.S. oil benchmark known as WTI bounced back 11.3 per cent, or $2.30, at $22.67 per barrel in electronic trading on the New York Mercantile Exchange.

As big swaths of the economy retrench while much of society comes to a halt in an attempt to slow the spread of the virus, investors have been clamouring for help from central banks and other authorities around the world to support the economy until it can begin to reopen.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.

Investors are struggling with uncertainty about how badly the economy is getting hit, how much profit companies will make and how many companies may go into bankruptcy due to a cash crunch.

The mayhem is creating a “cash crunch” that is putting pressure on financial institutions, said Jackson Wong of Amber Hill Capital in Hong Kong.

“That’s why the financial markets are performing so badly,” Wong said.

The turmoil is also rocking foreign exchange markets.

“Simply put, it’s a liquidity mismatch as there are far more U.S. dollars in demand than currently on offer,” Innes said.

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