Stock markets across the world plummeted on Friday as analysts warned the deadly coronavirus outbreak could trigger a recession.
Global stocks have seen an estimated $6 trillion wiped off their value in little over a month and there was no sign of the rout easing on Friday, with the FTSE 100 dropping 3 per cent immediately after opening.
Among the biggest fallers was British Airways owner International Airlines Group which saw its shares tank after warning the Covid-19 had caused a drop in demand for flights. The carrier has now lost more than a quarter of its value in less than 10 days.
Asian stock markets also plunged further on Friday after Wall Street registered its biggest single-day fall in nine years.
In Tokyo, the Nikkei plummeted 3.7 per cent and markets in Seoul and Sydney dropped by more than 3 per cent. Hong Kong and Shanghai dropped by more than 2.5 per cent.
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A man wearing a face mask crosses a road in Wuhan, the epicentre of the novel coronavirus outbreak.
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A view of the empty entrance to the Università Cattolica (Catholic University) in Milan, northern Italy, on 24 February, 2020.
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Empty streets in Daegu, South Korea, on 23 February, 2020.
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Empty streets in Daegu, South Korea, on 23 February 2020.
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A lone sanitation worker sits near the closed Hankou Railway Station in Wuhan, Hubei province, China, on February 24, 2020.
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A view of a deserted street in Codogno, northern Italy, on February 23, 2020.
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Italian police officers set a road block in Codogno, Northern Italy, on Monday, Feb. 24, 2020.
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A supermarket closed in Codogno, one the northern Italian towns placed under lockdown, on February 23, 2020.
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A lone cyclist wearing sanitary masks pedals in the center of Codogno, Northern Italy.
LaPresse via AP
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An empty road at the entrance of the small Italian town of Codogno on February 23, 2020.
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A man wearing a face mask crosses a road in Wuhan, the epicentre of the novel coronavirus outbreak.
Reuters
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A view of the empty entrance to the Università Cattolica (Catholic University) in Milan, northern Italy, on 24 February, 2020.
EPA
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Empty streets in Daegu, South Korea, on 23 February, 2020.
EPA
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Empty streets in Daegu, South Korea, on 23 February 2020.
EPA
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A lone sanitation worker sits near the closed Hankou Railway Station in Wuhan, Hubei province, China, on February 24, 2020.
Reuters
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A view of a deserted street in Codogno, northern Italy, on February 23, 2020.
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Italian police officers set a road block in Codogno, Northern Italy, on Monday, Feb. 24, 2020.
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A supermarket closed in Codogno, one the northern Italian towns placed under lockdown, on February 23, 2020.
EPA
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A lone cyclist wearing sanitary masks pedals in the center of Codogno, Northern Italy.
LaPresse via AP
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An empty road at the entrance of the small Italian town of Codogno on February 23, 2020.
AFP via Getty
That followed a bloodbath of a session in New York on Thursday which saw the Dow Jones Industrial Average crashing 1,100 points.
The S&P 500 sunk to its fastest-ever correction – meaning a fall of 10 per cent from a recent high – after reaching the milestone in just six trading days.
Connor Campbell, market analyst at Spreadex, said the historic falls would deepen when US markets open again on Friday.
“The Dow Jones is facing a 500 point plunge when the bell rings on Wall Street, taking it below 25250 – more than 4000 points off of last week’s all-time highs.
“Any market-rescuing positive headlines regarding the outbreak itself seem a way off.”
Analysts warned that market turmoil offered a taste of the economic fall-out from a potential coronavirus pandemic.
“If Covid-19 morphs into a severe pandemic, that could herald a bear market for equities, which is usually accompanied by a recession,” said Lukman Otunuga, a senior research analyst at FXTM.
Half of UK and US firms were already predicting a recession this year, according to a survey of 700 senior executives by trade finance provider Stenn.
Bank of England Governor Mark Carney warned on Friday the Covid-19 outbreak could damage Britain’s economy as multinationals struggle to supply goods and services amid factory shutdowns and cancelled flights.
“What we are picking up with some of our bigger companies and companies around the world is that supply chains… are getting a little tight. That’s lower activity,” Mr Carney told Sky News.
There’s less tourism – as you can see on our streets here in the UK. That’s lower activity as well.
“We would expect world growth would be lower than it otherwise would be, and that has a knock-on effect 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.”
Oil prices also fell on the expectation that industrial activity will slow down sharply.
