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| Coronavirus: Shares face worst week since financial crisis | |
| (about 3 hours later) | |
| US shares have sunk further as stock markets suffer their worst week since the global financial crisis of 2008. | US shares have sunk further as stock markets suffer their worst week since the global financial crisis of 2008. |
| The Dow Jones, hit by its biggest ever daily points drop on Thursday, was down about 2% in mid-day trade as fears over the impact of the coronavirus continued to grip investors. | |
| The main European markets also fell sharply on Friday, with London's FTSE 100 index down 3.4%. | |
| Investors are worried the coronavirus impact could spark a global recession. | Investors are worried the coronavirus impact could spark a global recession. |
| The news of more coronavirus cases, notably in Italy, has raised concerns of a much larger economic effect than previously expected. | The news of more coronavirus cases, notably in Italy, has raised concerns of a much larger economic effect than previously expected. |
| In an interview with Sky News, Bank of England governor Mark Carney warned that the coronavirus outbreak could lead to a downgrade of the UK's economic growth prospects. | In an interview with Sky News, Bank of England governor Mark Carney warned that the coronavirus outbreak could lead to a downgrade of the UK's economic growth prospects. |
| Other countries are also reassessing their economic forecasts, as dozens of firms warn of disruptions to their supply chains and a decline in consumer demand. | |
| US tech giants Apple and Microsoft are among the firms that have said their business will be affected, while US investment bank Goldman Sachs warned on Thursday that the coronavirus is likely to wipe out any growth in US company profits this year. | |
| Shares in airlines have been especially hard-hit as travel bans are imposed and companies limit staff travel. On Friday, airline group IAG - which owns British Airways and Iberia - said its earnings had been affected by "weaker demand" as a result of the outbreak. | Shares in airlines have been especially hard-hit as travel bans are imposed and companies limit staff travel. On Friday, airline group IAG - which owns British Airways and Iberia - said its earnings had been affected by "weaker demand" as a result of the outbreak. |
| More anxiety ahead | More anxiety ahead |
| "A known unknown" is how one major company boss described the economic fallout of coronavirus to the BBC. | "A known unknown" is how one major company boss described the economic fallout of coronavirus to the BBC. |
| But what the markets have woken up to - perhaps belatedly - is that the disruption to the economic activity from coronavirus is wider, deeper and perhaps longer lasting than previously assumed. | But what the markets have woken up to - perhaps belatedly - is that the disruption to the economic activity from coronavirus is wider, deeper and perhaps longer lasting than previously assumed. |
| As major outbreaks spring up outside China, it is clear that it is not just global supply chains but also demand from consumers that's suffering, as efforts to contain the virus keep them away from shops, bars and restaurants. | As major outbreaks spring up outside China, it is clear that it is not just global supply chains but also demand from consumers that's suffering, as efforts to contain the virus keep them away from shops, bars and restaurants. |
| What is unknown is exactly how bad and how lasting the impact could be. But what is known is that this comes at an already tricky time for the global economy with Japan, Italy, China and the UK among those already seeing growth faltering. | What is unknown is exactly how bad and how lasting the impact could be. But what is known is that this comes at an already tricky time for the global economy with Japan, Italy, China and the UK among those already seeing growth faltering. |
| As economists slash their growth forecasts, policymakers are debating how much they can do to help, given how low interest rates remain. What's entirely clear is that investors face more anxiety ahead. | As economists slash their growth forecasts, policymakers are debating how much they can do to help, given how low interest rates remain. What's entirely clear is that investors face more anxiety ahead. |
| Mayank Mishra, a strategist at Standard Chartered Bank, said: "Previously the market had taken some comfort in the falling infection rates in China as a result of containment measures put in place earlier. | Mayank Mishra, a strategist at Standard Chartered Bank, said: "Previously the market had taken some comfort in the falling infection rates in China as a result of containment measures put in place earlier. |
| "But the spread of the coronavirus infection outside China, with clusters emerging in South Korea, Italy and Japan, has increased concerns significantly." | "But the spread of the coronavirus infection outside China, with clusters emerging in South Korea, Italy and Japan, has increased concerns significantly." |
| The S&P 500 fell about 1.2% on Friday, while the Nasdaq was about 0.5% lower. | |
| The worries also hit the main European share indexes, sending Germany's Dax index down 4.2% and France's Cac 40 index down 3.9%. | |
| Earlier in Asia, Japan's Nikkei 225 index dropped 3.7%, bringing its fall for the week to more than 9%. China's Shanghai Composite index also fell 3.7% on Friday. | |
| The price of Brent crude oil also fell on fears the virus would hurt demand, dropping nearly 2% to $51.21 a barrel on Friday, its lowest level for more than a year. | |
| In the US, White House economic advisor Larry Kudlow sought to calm market fears, telling reporters that he did not think the market plunge was a broader warning about the economy. | |
| "I just don't think this short-term stock market plunge is going to have any long-term effects," he said. "Sometimes the psychology is a lot worse than the fact." | |
| Several key global market indexes - including the FTSE 100 and the Dow Jones - have fallen more than 10% from recent highs. A drop of that magnitude is generally referred to as a correction. | |
| However, share prices were hovering at record levels before the sell-off started, noted Sonja Laud, chief investment officer at Legal & General Investment Management. | |
| "What markets are trying to digest is how long this is going to go on and what the economic damage will be," she said. | |
| Many analysts now predict the US central bank will cut interest rates in an attempt to counter any impact. James Bullard, who sits on the Fed's board of governors, said Friday that cuts are "a possibility" should the virus continue to spread, but he warned that market expectations would not force the bank to act. | |
| Ms Laud said that many central banks had little room for manoeuvre, because rates are already so low. | |
| "Realistically it's mostly the Fed and to some extent the Bank of England that still have the chance to cut rates," she told the BBC. | |
| "I think there will be a huge focus on governments to step up fiscal stimulus under the assumption there is not a lot more that central banks can do to stimulate the economy." | "I think there will be a huge focus on governments to step up fiscal stimulus under the assumption there is not a lot more that central banks can do to stimulate the economy." |