Stocks tumble across Europe and Asia a day after the worst rout on Wall Street since 2011
S&P500 IN CORRECTION IN JUST 6 DAYS, EUROPEAN SHARES FALL 3%-5%
Coronavirus panic sent world share markets skidding again yesterday, putting them on course for their worst weekly fall since the 2008 global financial crisis, with almost $6 trillion wiped from their market value so far this week.
The rout showed no signs of slowing as Europe’s main markets slumped 3-5 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.
Bets are now 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.
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 trade war fallout.
MSCI’s all-country world index, which tracks almost 50 countries, was down more than 1 per cent and almost 10 per cent for the week — the worst since October 2008.
Losses on Wall Street deepened yesterday morning following a bruising open. About 1510 GMT, the Dow Jones Industrial Average was down about 940 points, or 3.6 per cent, at 24,829.83. The broad-based S&P 500 sank 3.6 per cent to 2,872.72, while the tech-rich Nasdaq Composite Index tumbled 3.1 per cent to 8,304.42.
Europe’s airlines and travel stocks have plunged 18 per cent in their worst week since the 2001 9/11 attacks in the United States. The CBOE volatility index, often called the “fear index”, jumped as high as 47, its highest in about two years, well out of the 11-20 range of recent months.
Asia wilts
In Asia, MSCI’s regional index excluding Japan shed 2.6 per cent. Japan’s Nikkei slumped 3.7 per cent on rising fears the July-August Tokyo Olympics in may be called off due to the coronavirus.
Indian stocks plunged, with the benchmark indexes posting their worst drop in more than four years, as the fast-spreading coronavirus roiled global markets. The broader NSE Nifty 50 index ended 3.71 per cent lower at 11,219.20 and the benchmark S&P BSE Sensex fell 3.4 per cent to 38,383.32.