THE FTSE 100 has dropped 13 per cent this week as coronavirus fears cause the biggest one-week fall since the financial crisis in 2008.
In the UK, the number of confirmed coronavirus cases has hit 19, while Northern Ireland has also confirmed its first case – follow our live blog for the latest.
It’s seen London’s top index, the FTSE100, which is made up of the UK’s 100 largest firms, fell 3.2 per cent today to 6,580.
In terms of points lost it is also the FTSE100’s second worst week since the index was founded in 1984.
It had already closed the day yesterday down 246.07 points to 6796.4 – a 3.5 per cent drop, and at one point lost more than 4 per cent of its value.
The tumbling value has seen £152billion wiped off the index in the past four days amid fears around Covid-19.
If it continues to fall over the course of the day another £60billion could be wiped off it.
Bank of England Governor, Mark Carney, told Sky News this morning that Britain should prepare for an economic hit from coronavirus.
He warned: “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, it will have an impact.”
Mr Carney added that global supply chains have tightened, while there’s less tourism – even on the streets in the UK – all of which is having an impact on the markets.
On the FTSE100, every company other than Rolls-Royce was falling on Friday morning just after markets opened.
The worst losers were the airlines, with British Airways owner IAG seeing a more than 9.5 per cent drop in share price, and Tui, the travel group, notching a 6.2 per cent fall.
But its not just the UK’s largest index that have crashed, in the US the Dow Jones has plummeted over 500 points – or 2.28 per cent – to 25,178.
Yesterday, the Dow Jones suffered its worst drop in history of almost 1,200 points – a 4.4 per cent fall.
America’s Nasdaq composite index is also down on Friday by 116 points or 1.3 per cent to 8,449, while the S&P 500 has fallen 2.28 per cent or by 55.33 points to 2,923.
Markets are panicking – should you?
THE Sun’s business editor, Tracey Boles, share her thoughts on this week’s tumbling stock markets:
Stock markets around the world are heading for their third worst week EVER, behind the 1987 crash and the post-Lehman Brothers meltdown of autumn 2008.
In London, the FTSE100 blue chip index of shares is down 11 per cent this week which is bad news for shareholders as well as for the pensions and Isas invested in stocks.
Meanwhile, outgoing Bank of England governor Mark Carney has said the UK can expect an economic knock.
But comparisons to the financial crisis are premature, City analysts say.
Russ Mould of AJ Bell said: “Another 2008? That was the Collapse of the Western Financial System as we knew it.
“Based on what we know today, the outbreak is not in the same league by comparison, in economic terms at least, frightening and unquantifiable as it is.”
He added: “It’s not even as bad as the European debt crisis of 2011 when there was a risk of another banking and economic meltdown and a major recession.”
So why are markets taking such a hammering?
Traders have taken fright since the outbreak spread from Asia to Europe – and the corporate warnings are mounting up.
So far, 132 UK listed companies have warned of coronavirus effects.
“Markets have been on ten-year run and 10 per cent corrections have been very, very rare,” Mr Mould said.
“Now they are having to take a more sober, reflective view as earnings forecasts are nudged lower and risks go higher. In summary, investors had started to forget that share prices can go down as well as up.”
The markets may be panicking, but the best thing that investors can do is take the long view. Shares should recover in the medium term, as they usually do.
Wall Street suffered its worst two-day losing streak in two years on Wednesday.
The panic has sent world shares skidding again, knocking £4.6trillion off market values this week.
Global insurers are set to face hefty bills if the virus forces the cancellation of the Summer Olympics in Tokyo.
Russ Mould, investment director at AJ Bell, said: “Fears over the coronavirus spreading around the world have this week caused mayhem on the markets, leaving investors holding their head in their hands as large chunks are wiped off people’s savings pots.
“In times of crisis people tend to veer towards supposed safe-haven assets such as gold, so it might come as a surprise to see gold miners among the worst performing FTSE 350 stocks on Friday.
“Companies are already experiencing supply chain problems and the idea that many people might be forced to work from home could impact productivity.
“Shutting schools would also compound the problem as parents would have to look after their children and may not be able to work, and consumer spending would likely fall.”
Tokyo’s Nikkei225 index has fallen by 3.6 per cent to 21,142.
In Indonesia, Jakarta’s JKSE fell four percent overnight, while Shanghai, Seoul, Bangkok, and Sydney all lost more than three percent.
Major firms including Apple, Microsoft, and Mastercard are now expecting revenues to be lower than forecast because of supply chain disruptions caused by the virus.
Adrian Lowcock, head of personal investing at investment platform Willis Owen said: “Up until this week markets were fairly relaxed about it as they hoped the impact was limited to China and thus the feed through to global growth would be short term and limited.
“That’s changed now there have been significant breakouts in Italy particularly, and a concerning case in the US.
“This has undoubtedly raised the possibility that it will become a global issue, and if this comes to pass this will have a much bigger impact on global growth and hit company profits.”
