Outbreak leads to crash in markets
£4.6 trillion in value of world shares wiped out
PANIC OVER the coronavirus outbreak has sent world share markets on course for their worst weekly fall since the 2008 global financial crisis, with almost £4.6 trillion wiped from their market value this week.
The FTSE100 closed down nearly 3.2 per cent and is now at its lowest level since 2016, having lost £58bn on Friday alone and has declined by £210bn since the start of the week.
In total, the index lost 215.79 points, bringing it down to 6,580.61 as the blue chip market posted its worst week since October 2008, the depths of the financial crisis.
In terms of points lost, it is also the FTSE 100’s second worst week since being founded in 1984.
The rout shows no signs of slowing as Europe’s main markets slumped 3 to 5 per cent and the ongoing dive for safety sent yields on US government bonds – widely seen as the world’s most secure asset – to fresh record lows.
Hopes that the epidemic which started in China would be over in months and that economic activity would quickly return to normal have been shattered this week as the number of international cases spiralled.
There is also now mounting speculation that the Federal Reserve will cut US interest rates as soon as next month and other major central banks will follow to try and nurse economies through the troubles and stave off a global recession.
“The volatility isn’t as surprising as the fact that it took so long to rear its head. However, the recent swings indicate the complacency that appears to have settled over markets during the earlier stages of the outbreak has been dislodged,” said Paras Anand, CIO, Asia Pacific at Fidelity International.
Virtually every company in the FTSE100 saw their shares in the red, with Yorkshire firms Persimmon and Morrisons both seeing their share price in decline.
Disruptions to international travel and supply chains, school closures and cancellations of major events have all blackened the outlook for a world economy that was already struggling with the US-China trade war fallout.
Meanwhile, Bank of England Governor Mark Carney said Britain should prepare for an economic hit, telling Sky News that he would expect world growth to be lower than it otherwise would be, something which would impact on the UK.
“We’re not picking that up yet at all in the European and UK economic indicators, but if the world is slower than the UK, a very open economy, will have an impact,” he said.