The coronavirus wiped out £ 59 billion from the FTSE 100 today to cap off another week of market turmoil.
The benchmark stock index fell 3.6% or 242.88 points to end the week with 6,462.55 points – its lowest since July 2016.
At the same time, the FTSE 250 lost 2.98%, or 576.62 points, to 18,746.51.
Elsewhere in Europe, Germany’s Dax Index fell 3.37% and the French CAC lost 4.14% as the markets canceled out the week’s gains.
The pan-European Stoxx 600 lost 3.67% for the day.
This comes after reports of a second coronavirus death in the UK today when coronavirus cases in Britain reached 163. Global Covid-19 infections have exceeded 100,000 .
Last week, the FTSE 100 saw more than £ 200 billion erased.
These losses raised fears of a major economic slowdown. But Avonhurst law firm political analyst Tina Fordham said the chances of government intervention were higher than during the 2008 financial crisis.
“Beyond the human cost, the coronavirus is the most important black swan [event] for politics, the markets and the economy since the global financial crisis, “said Tina Fordham, partner at Avonhurst law firm.
“The skills of managers are about to be tested, with much greater challenges – public health and safety – than during the debt crisis.
“A source of comfort to investors may be that the risk to public health probably means that a recession triggered by a pandemic would see more political support for the fiscal stimulus than the 2008 crisis. Although it also poses a shock demand that could hurt the economy if policy makers overreact. “
Read more: Coronavirus: Asian stocks follow the US in the red as infections approach 100,000
The S&P 500 and the Dow Jones are both expected to follow suit, down 3.1% and 2.6% respectively so far today, after Thursday’s heavy losses of more than 3%.
“Equities plunge as fear becomes the main emotion in the capital markets,” said Seema Shah, strategist at Global Global Investors.
“Solid global economic data, although reassuring, is quickly out of date in the face of this threat,” she added.
The Hang Seng of Hong Kong and the Nikkei 225 of Japan both lost more than 2% on Friday, while the Shanghai Composite lost 1.21%.
European stocks got off to a volatile start this morning and continued to fall during the day, with the German Dax and the French CAC 40 losing 3.42 and 3.77% respectively.
“In the absence of signs of a slowdown in the epidemic … investors are still in the grip of an almost unshakable panic, the various rate cuts practiced by the central bank this week only reinforce the gravity of the situation”, said Connor Campbell, analyst at Spreadex.
London actions rocked as epidemic spreads
In London, cruise ship Carnival slipped 5.25% to its lowest level since 2012 after one of its ships was prevented from docking in San Francisco after an epidemic of Covid-19 on board.
More than 2,000 people are on board the Grand Princess, including 140 British nationals.
FTSE 100 insurer Aviva fell nearly 3% after announcing its exit from the Indonesian market by selling its stake in the PT Astra Aviva Life joint venture to the other partner in the transaction.
Hammerson Mall owner’s shares plunged more than 5% to their lowest level since the 1990s following a warning from analysts at Goldman Sachs that the retail owner may have trouble finding a buyer .
Goldman analysts have downgraded Hammerson, which has depreciated £ 800 million from the value of its portfolio properties this year, from “buy” to “neutral”.
The total number of infections in Britain is now 116. An elderly woman with underlying health conditions yesterday became the first person in the country to die after contracting a coronavirus.
Read more: Companies Send Staff Home When Coronavirus Arrives in Canary Wharf
“It was a bitter end of the week for the markets as investors’ hopes for a full recovery in stocks were dashed,” said Russ Mold, chief investment officer of AJ Bell.
“Headlines in the spread of the coronavirus have worried investors about a global recession. This tension is likely to remain in the foreground until we have evidence that the virus can be contained, ”he added.
Government bond yields slide to record lows
The ongoing epidemic has also pushed the price of government bonds to historic highs and yields (which are moving in the opposite direction of prices) to record levels.
Fears linked to the epidemic have brought down the price of stocks as investors flock to the supposed refuge of government bonds.
Yields on UK 10-year government bonds fell to a record low of 0.23% this morning, while yields on equal maturities of German public debt, already in negative territory, also fell to a new record.
US government 10- and 30-year bond yields also fell to new record lows, the latter about to experience its largest daily decline since 2011.
It will get considerably worse, warns the star manager
The manager of an outstanding bond fund believes that the markets are not prepared for the gravity of the global fallout from the coronavirus epidemic.
Mike Riddell of Allianz Global Investors, which manages $ 4.6 billion (£ 3.6 billion) for the company and whose Strategic Bond Fund outperformed 98% of its peers last month, told Bloomberg that the virus-induced turbulence was just beginning.
Riddell said he believed bond yields should decline further, despite UK and US bond yields hitting new record lows.
Read more: UK house prices: Brexit clouds rise, but coronavirus threat looms
“The speed of re-fixing the market has obviously been dramatic, but the markets have only gone from risk-free pricing for something to moderate risk,” said Riddell.
“Where we think the markets can still move is volatility.”
Riddell added that while the health impact of Covid-19 was relatively moderate, it may not be the same for its economic and market impact.
“It is the quarantine and essentially the shutdown of large parts of the global economy that is causing substantial economic and financial damage,” said Riddell. “My basic scenario is that things are getting considerably worse from now on.”
Sequoia Capital Warns Against “Black Swan” Coronavirus
One of the world’s largest venture capital firms urged the founders and managers of its holding companies to prepare for the economic shocks caused by the coronavirus epidemic.
In a note also posted online, Sequoia Capital described Covid-19 as “the black swan of 2020”.
The note urged companies to consider cutting expenses, reviewing their workforce and preparing for changes in the fundraising and sales environment.
“With lives in danger, we hope conditions improve as quickly as possible,” said the note, which was approved by “Team Sequoia”.
Read more: Coronavirus Live: Second British “Dies From Covid-19” While Two BA Employees Self-Isolate
“In the meantime, we need to prepare for the turbulence and have a mindset prepared for the scenarios that may occur.”
The virus has already had a dramatic impact on the US tech industry, with big companies like Google, Apple and Facebook canceling travel plans and telling some employees to work from home.
An epidemic in Seattle, a major US technology center, killed 10, while cases in California rose to 60. The state declared a state of emergency, joining Washington State and Florida.
