Investors are facing their biggest weekly loss in years as the deadly coronavirus wreaks havoc on stock markets around the world.
Major benchmarks on both sides of the Atlantic have already fallen more than 8 per cent since the start of trading on Monday.
As the sell-off accelerated last night, the Dow Jones closed down 1190.95 points on Wall Street, following the worst session in London for four-and-a-half years.
Major benchmarks on both sides of the Atlantic have already fallen more than 8 per cent since the start of trading on Monday
That has taken losses in the last six days of trading to £2.8trillion – leaving savers all over the world nursing heavy losses on their pensions and other investments.
As spooked investors bailed out of shares, one seasoned expert declared: ‘We’re in panic mode.’
Asia puts bank in the firing line
Standard Chartered warned investors that the coronavirus outbreak would probably squeeze its income growth this year.
The Asia-focused bank said Covid-19 and democracy protests in Hong Kong would suppress growth below its 5 per cent-7 per cent target, and raised the possibility of bad loans rising.
The unrest in Hong Kong has already had an impact as profits for the final three months of 2019 missed analyst estimates by 32 per cent.
For the full year, profit before tax was up 8 per cent to £3.2billion.
Its shares fell 3.6 per cent, or 21p, to 570.6p.
Multinational companies including Aston Martin, Microsoft, Standard Chartered and Budweiser owner AB Inbev warned about the impact of the virus.
Airlines and travel companies are among the worst hit as flights to affected areas are shunned by passengers or cancelled.
British Airways owner IAG was down 7.9 per cent yesterday. And Easyjet fell another 7.7pc and has lost more than a quarter of its value this week.
Philip Marey, senior US strategist at Rabobank, said: ‘Markets have come to realise that the outbreak is much worse and are realistically pricing in the impact on the economy.
‘It’s a bit of a catching up from the relative optimism that was there in the beginning when markets thought the virus will be contained to China with some minor outbreak outside.’
The Stoxx 600 index of eurozone shares fell 3.3 per cent, leaving European investors set for the worst week since the single currency debt crisis in 2011.
Wall Street was on course for its grimmest week since the financial crisis in 2008.
Microsoft hit by supply problem
Microsoft has warned that computer sales will be affected by the impact of coronavirus.
The US technology giant said the outbreak was causing problems for its supply chain, with factories in China reopening slower than had been expected.
This would affect sales of its Windows and Surface computers. It echoed alerts by rivals Apple and Hewlett Packard, which have also been affected by disruption to Chinese manufacturing.
Traders were spooked by Microsoft’s announcement, with a shares sell-off yesterday wiping tens of billions of pounds off its market value.
The company is still worth more than $1.2trillion, or about £930billion.
And in the UK, the FTSE 100 index took its biggest percentage hit in four-and-a-half years, falling 3.5 per cent, or 246.07 points, to 6796.4.
Meanwhile the FTSE 250, which includes more UK-focused firms, was down 4.1 per cent, or 839.5 points, to 19783.45.
Boozers ditch Corona beer
The brewer that makes Corona beer faces its steepest decline in quarterly profit for at least a decade as coronavirus hits demand for its drinks in China.
Anheuser-Busch Inbev, the world’s biggest brewer, said the effects of the virus wiped £221million off sales in the first two months of 2020.
The firm, which also owns Stella Artois, now expects first-quarter profits to be 10 per cent lower than a year ago, adding ‘The impact continues to evolve. The outbreak has led to a significant decline in demand in China. Additionally, demand during Chinese new year was lower than in previous years.’
This was the FTSE 250’s largest percentage drop since June 2016, in the aftermath of the Brexit referendum.
It means £188.6billion has been wiped off the value of Britain’s 350 biggest listed firms so far this week.
The sell-off has also wiped £2.8trillion off the value of global shares in six days.
This has led to an alarming fall in the value of investment portfolios and pension pots, which are typically invested heavily in blue-chip companies.
‘We’re in panic mode,’ said Jim Paulsen, who is the chief investment strategist of the Leuthold Group.
‘This isn’t just a temporary pull-back where people are wondering whether to buy the dip, this is people not wanting to touch this.’
British Airways has cancelled flights to mainland China until the end of March and also axed some flights to and from Milan as a result of reduced demand for travel to the area, which is at the centre of Italy’s coronavirus outbreak.
Shares in Norwegian Air plunged by a quarter in value to an 11-year low yesterday, meaning it has now lost more than half its value since the beginning of the week.
Virus drags oil to a 14-month low
By Hugo Duncan
Oil tumbled to its lowest level for more than a year as the spread of coronavirus sparked another day of carnage on the financial markets.
The price of crude fell around 5 per cent towards $51 a barrel on fears that a sharp slowdown in the global economy will hit demand. Oil is down more than 12 per cent this week – 22 per cent so far this year – and has not been this cheap since December 2018.
Motoring groups said the slump should lead to lower prices at the petrol and diesel pumps. RAC fuel spokesman Simon Williams said: ‘Unless the barrel price suddenly leaps in the next few days, we expect to see major supermarkets announce fresh price cuts within the next week.
‘This could lead to the average petrol price falling below 122p per litre for the first time in 12 months, and diesel dipping below 125p per litre for the first time in nearly two years.’
The latest sell-off in the oil price came as global stock markets tumbled.
Gold headed the other way, rising towards $1,650 an ounce, as investors looked for somewhere safe to put their money.
The ructions could see oil cartel Opec and its allies cut production to prop up prices when they meet in Vienna next week.
Edward Moya, an analyst at trading firm Oanda in New York, said: ‘Oil is in free fall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters.
Prices will remain very vulnerable as the pandemic fears could deliver a greater shock to demand than what happened during the financial crisis.
‘Any bounces with oil prices will likely be muted until markets better understand what the total global shock to crude demand will be.’
Jeff Kilburg, chief executive of Chicago-based KKM Financial, said: ‘Current forecasts of crude oil demand have fallen off a cliff.’
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