Shares and oil plunge on fears about virus
STOCKS tumbled and oil prices hit a three-month low yesterday as concerns over the impact of China’s coronavirus on the global economy rocked investors.
Over £40billion was wiped from bluechip companies, with the FTSE 100 and leading European stock markets down over two per cent as China struggled to contain the spread of the disease. America’s Dow Jones had lost more than 400 points by the UK close.
Expectations that demand for oil will slide as more businesses have to shut sent Brent crude futures down three per cent to under $59 a barrel.
Travel companies, international hotels and businesses with big exposure to Asia such as luxury group Burberry suffered heavy share falls as investors piled in to safer-haven assets such as gold.
Russ Mould, investment director at AJ Bell, said that the market was in “panic mode” over the virus with the New Year holiday in China “an escalation” of attempts to contain it.
He said “As the death toll rises, all eyes are on the World Health Organisation. So far it has resisted calls to declare the outbreak a health emergency. Should that change there could be restrictions on international trade and travel, putting pressure on a fragile global economy.”
Saudi energy minister Prince Abdulaziz bin Salman Al Saud said he felt the virus would be contained. He said markets are being “driven by psychological factors and extremely negative expectations adopted by some market participants despite very limited impact on global oil demand”.
Rupert Thompson, chief investment officer at wealth manager Kingswood, warned the short-term impact on China’s economy is likely to be “considerable”. He added: “As for global equities, the risk is clearly that the news gets worse before it gets better.”