Shares around the world are in free-fall as investors see the spread of coronavirus bringing the world economy to a halt and fear leaders are not responding effectively.
At the start of US trading, shares plunged and triggered an automatic temporary suspension in trading aimed at curbing panicky selling.
When trade resumed, shares continued to fall, following European markets lower.
The initial declines came after the US restricted travel from mainland Europe.
The Dow led falls on the US indexes, dropping more than 8%.
The UK’s main share index was down more than 9%, trading at its lowest level since the 2008 financial crisis.
Indexes in Paris and Frankfurt dropped further after the European Central Bank (ECB) failed to cut interest rates, although it did pledge fresh stimulus measures.
Meanwhile, rate cuts by the US central bank last week and the Bank of England on Wednesday appear to have had little effect.
Earlier, stocks in Asia also saw big falls, with Japan’s benchmark Nikkei 225 index closing 4.4% lower.
“We can call this a market crash – particularly given speed and sharpness, as well as the size declines,” said Supriya Menon, senior multi-asset strategist at Pictet Asset Management. The “question is whether this will cause a recession”.
In the UK, every single share in the FTSE 100 index was trading lower. Once again, travel companies saw some of the biggest falls, with airline group IAG down more than 10% and Tui falling 20%.
Other UK companies warning on the impact of Covid-19 on Thursday included:
In the US, Norwegian Cruise Line Holdings and Royal Caribbean Cruises were more than 25% lower, while Princess Cruises, a line owned by Carnival, said it would suspend operations for 60 days.
Oil prices also fell, with Brent crude down more than 6% at about $33 a barrel.
On the floor of the New York Stock Exchange, tensions were high. Some traders were speculating the tumbles could trigger a second trading suspension – something that has never happened, not even during the financial crisis.
Stocks in Europe had fallen further after ECB left interest rates unchanged, but announced a quantitative easing programme of asset purchases.
The ECB said it would buy €120bn more bonds by the end of this year, on top of the €20bn a month it already buys.
It will also launch a new programme of cheap loans to banks, aiming to encourage them to lend the small businesses.
AFP VIA GETTY IMAGES
Investors are waiting to see what kind of economic relief the US will unveil.
In a presidential address on Wednesday, US President Donald Trump announced a 30-day ban on travellers from 26 European countries.
He also said the government would extend deadlines for tax payments for those affected, increase loans to small businesses and provide financial relief for US workers who are ill, quarantined or caring for others due to the illness.
However, Michael Hewson, chief market analyst at CMC Market, said financial markets reacted badly to the Presidential address, as the new measures “don’t appear to go far enough”.
Republicans and Democrats in Congress appear at odds over additional steps while Mr Trump’s favoured approach – a tax cut for workers – has failed to garner widespread support.
Many people’s initial reaction to “the markets” is that they are not directly affected, because they do not invest money.
Yet there are millions of people with a pension – either private or through work – who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.
So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.
Read more here.
The Western world’s three largest central banks have now pitted their collective firepower against the economic chill caused by the coronavirus – to little effect.
Stock markets continue to slide. The FTSE 100 began the day looking rocky, opening 5% down, and by early afternoon it had nearly doubled that loss to be off 9.5%.
If trading were to stop now, it would be one of the biggest one-day falls in history. The largest drop was on 20 October 1987 when the FTSE 100, then just three years old, fell 12.2% on the day after Black Monday.
Observers again might wonder what new information is spooking investors, given that central banks have in the last 10 days done their best to halt the slide. In truth, there is little new – most traders already knew that the virus is likely to cause significant economic disruption likely to push most Western economies into recession.
What may have spooked them again is President Donald Trump’s decision to stop most travel between continental Europe and the United States – a big enough factor in itself, but more importantly, the manner in which it was done. There was no consultation, and Mr Trump looked uncharacteristically uncertain, as if he, too, had finally been panicked by the virus.
There is also a small, but telling detail – Mr Trump first said the ban would apply to cargo flights, but then corrected himself to say it would not. A big proportion of cargo, however, is carried in the belly holds of passenger aircraft. If there are no passenger flights, there will be much less cargo, an enormous disruption to exporters and manufacturers on both sides of the Atlantic.
America’s Dow Jones index took its lead from the FTSE 100 and opened with another big fall. Get ready for even more stimulus from the Federal Reserve.
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