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Coronavirus: Global stocks plunge as coronavirus fears spread Coronavirus: Global stocks plunge as coronavirus fears spread
(32 minutes later)
Shares around the world have plunged after central bank actions aimed at cushioning the blow from coronavirus did little to appease investors. 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 triggering an automatic temporary suspension in trading aimed at curbing panicky selling. At the start of US trading, shares plunged and triggered an automatic temporary suspension in trading aimed at curbing panicky selling.
The main US and UK share indexes were both 9% lower, with European markets facing their worst ever daily loss. When trade resumed, shares continued to fall, following European markets lower.
The initial falls came after the US restricted travel from mainland Europe. The initial declines came after the US restricted travel from mainland Europe.
Investors are worried about the response by authorities to the coronavirus. The UK's main share index was down over 9%, trading at its lowest level since the 2008 financial crisis.
Earlier, the European Central Bank failed to cut interest rates, although it did pledge fresh stimulus. Meanwhile, rate cuts by the US central bank last week and the Bank of England on Wednesday appear to have had little effect. 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, the decision by the US central bank last week and the Bank of England on Wednesday to cut interest rates appears to have had little effect.
Mr Trump's promises of economic assistance also disappointed. Earlier, stocks in Asia saw big falls, with Japan's benchmark Nikkei 225 index closing 4.4% lower.
Overnight, Asian markets also saw big falls, with Japan's benchmark Nikkei 225 index closing 4.4% lower. 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%.
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 nearly 9% and Tui falling 14%. Other UK companies warning on the impact of Covid-19 on Thursday included:
The travel sector's problems could be compounded by the fact that the UK government is set to step up its response to coronavirus. This could include banning large gatherings, such as sports events or concerts. 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.
Other companies warning on the impact of Covid-19 on Thursday included:
Elsewhere in Europe, share indexes in Paris and Frankfurt were down by more than 7%.
They fell sharply after the ECB refrained from cutting eurozone interest rates, although it did increase its quantitative easing programme of asset purchases.
It 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.
"Donald Trump's restrictions on travel from many parts of Europe to the US have spooked the market, particularly because his initial comments implied they would also block cargo, which he has since retracted," said Russ Mould, investment director at AJ Bell.
"The travel ban will raise expectations that the US will enter recession."
Oil prices also fell, with Brent crude down 8% at $32.92 a barrel.Oil prices also fell, with Brent crude down 8% at $32.92 a barrel.
On Wednesday, Mr Trump announced a ban on travellers from 26 European countries entering the United States for 30 days, starting on Friday, in order to fight the coronavirus outbreak. Stocks in Europe had fallen further after ECB left interest rates unchanged, but announced a quantitative easing programme of asset purchases.
In a televised address from the Oval Office, Mr Trump said the restrictions did not apply to the UK. 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.
Stocks had started falling on Thursday after US President Donald Trump announced a ban on travellers from 26 European countries entering the United States for 30 days, starting on Friday, in order to fight the coronavirus outbreak.
He also announced financial relief for US workers who are ill, quarantined or caring for others due to the illness. The emergency action will also see the US Treasury Department deferring tax payments without interest or penalties for certain businesses and individuals affected.He also announced financial relief for US workers who are ill, quarantined or caring for others due to the illness. The emergency action will also see the US Treasury Department deferring tax payments without interest or penalties for certain businesses and individuals affected.
At the same time, the US government will provide capital and liquidity to small firms affected by the outbreak.At the same time, the US government will provide capital and liquidity to small firms affected by the outbreak.
However, Michael Hewson, chief market analyst at CMC Market, said that it was "unsurprising" that financial markets reacted badly to the Presidential address. However, Michael Hewson, chief market analyst at CMC Market, said that it was "unsurprising" that financial markets reacted badly to the Presidential address, as the new measures "don't appear to go far enough".
He said that the new fiscal measures "don't appear to go far enough". Russ Mould, investment director at AJ Bell also said the travel restrictions had "spooked the market".
The falls in US shares mean the Dow is now 20% below its recent high, pushing it into what is known as a "bear market". That brings to an end the longest streak of gains for US stocks to date, which started in 2009. "The travel ban will raise expectations that the US will enter recession." he said.
The falls in US shares mean the Dow is now more than 20% below its recent high, pushing it into what is known as a "bear market". That brings to an end the longest streak of gains for US stocks to date, which started in 2009.
"It is not the virus itself, but rather the fear and panic related to the virus and the associated altered economic behaviour that could be a damaging tipping point, forcing the global economy onto a darker path," said Katrina Ell, a senior economist at Moody's Analytics."It is not the virus itself, but rather the fear and panic related to the virus and the associated altered economic behaviour that could be a damaging tipping point, forcing the global economy onto a darker path," said Katrina Ell, a senior economist at Moody's Analytics.
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.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%.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.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.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.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.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.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.
What are your experiences relating to the coronavirus outbreak? Share your experiences by emailing haveyoursay@bbc.co.uk.What are your experiences relating to the coronavirus outbreak? Share your experiences by emailing haveyoursay@bbc.co.uk.
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