LONDON (AFP) — Stock markets collapsed Friday and oil tumbled on heightened panic over coronavirus and its predicted devastating damage to global economic growth.
Haven investments gold and the yen surged as the World Health Organization warned that the epidemic must be taken seriously.
In midday deals, the Paris stock market tanked by 4.1%, Frankfurt dived by 3.9%, London shed 3.4%, Madrid lost 3.6% and Milan tumbled 3.8% in a fierce global markets selloff that began about two weeks ago.
With no end in sight to the spreading COVID-19 disease, Tokyo stocks were down by 2.7% at close of trading, Shanghai fell by 1.2% and Hong Kong lost 2.3% on heightened investor panic.
Oil, already slumping on virus-linked demand fears, extended losses to more than 5% on reports Russia wants to delay deeper output cuts recommended by its OPEC allies.
“Stocks are on the back foot once again, with markets tumbling amid continued growth in the coronavirus crisis,” said analyst Joshua Mahony at London-based IG trading group.
“The stimulus-led rebound in global stocks has been short-lived, with fears over an escalation of the coronavirus crisis providing yet another bout of selling across European markets,” IG said.
While governments and central banks have unleashed or prepared to roll out stimulus measures, the rapid spread of the disease and rising death toll are putting a strain on economies and stoking concerns of a worldwide recession.
The U.S. Federal Reserve sprang a surprise half-point interest rate cut on Tuesday in an attempt to stem devastating fallout.
But as coronavirus continues its rapid spread — more than 100,000 people in 85 countries have been infected — investors are fleeing risky assets such as stocks for financial havens.
“With the economic impact of coronavirus large and rising, policymakers in advanced economies are being forced to react,” said economist Adam Slater at research group Oxford Economics.
“But conventional monetary and fiscal options, like the U.S. Federal Reserve’s recent emergency rate cut, may not be enough.”
WHO chief Tedros Adhanom Ghebreyesus warned that “this is not a drill” as outbreaks surged in Europe and the United States, where medical workers warned of a “disturbing” lack of hospital preparedness.
With dealers flocking to safety and yields on U.S. Treasuries at record lows, gold has rocketed more than 5% this week to reach more than seven-year highs.
In oil markets, Brent North Sea crude dived to $47.02 per barrel, the lowest level since July 2017. West Texas Intermediate tumbled to $43.28 — the lowest since late 2018.
“Over the past month, forecasters have slashed their oil price estimates quicker than you can say ‘pass the hand sanitizer’,” said PVM analyst Stephen Brennock. PVM is an oil analyst and broker.
“In short, COVID-19 is in the midst of an international offensive and the worst effects are yet to be felt. Global oil demand destruction is therefore poised to intensify,” Brennock said.
News that OPEC ministers had recommended a huge production cut of 1.5 million barrels a day to offset the impact of the virus was unable to provide traders with any lift.
There are concerns over whether key producers outside the group — Russia in particular — will follow the advice.
World oil prices have wiped out more than a fifth of their value so far in 2020.
Here are key figures around 1130 GMT on Friday:
London – FTSE 100: DOWN 3.1% at 6,496.36 points
Frankfurt – DAX 30: DOWN 3.5% at 11,531.90
Paris – CAC 40: DOWN 3.5% at 5,172.44
Milan – FTSE MIB: DOWN 3.3% at 20,834.22
EURO STOXX 50: DOWN 3.4% at 3,249.36
Tokyo – Nikkei 225: DOWN 2.7% at 20,749.75 (at close Thursday)
Hong Kong – Hang Seng: DOWN 2.3% at 26,146.67 (at close)
Shanghai – Composite: DOWN 1.2% at 3,034.51 (at close)
New York – Dow: DOWN 3.6% at 26,121.28 (at close)
Dollar/yen: DOWN at 105.29 yen from 106.16 yen at 2200 GMT
Euro/dollar: UP at $1.1326 from $1.1237
Pound/dollar: UP at $1.3016 from $1.2954
Euro/pound: DOWN at 87.01 pence from 86.75 pence
Brent Crude: DOWN 4.3% at $47.88 per barrel
West Texas Intermediate: DOWN 3.1% at $44.47
© Agence France-Presse