A week of sell-offs as investors take fright at the potential economic impact of the coronavirus crisis yesterday officially tipped U.S. stock markets into a ‘correction’. A correction is defined as a fall of at least 10% from a recent peak – a qualification that was yesterday met by all three major Wall Street indices. The S&P 500, Nasdaq and Dow Jones Industrial Average all also set new records for their steepest ever one-day points fall.
In the UK the FTSE 100 also lost 3.5% and the FTSE 250 4.1%. Heavy losses were felt across the board during the Asian and European sessions that led into a devastating day on Wall Street.
Stocks that had recorded strong recent gains were among those that suffered the biggest drops. Tesla slumped 12.8%, having previously racked up gains of 115% for the year to the end of last week. Yesterday’s new drop took the electric car maker’s accumulative loss for the week to just under 25%.
The FTSE 100 has fallen by over 8% in total this week and barring a strong Friday to close the week, will record its most significant one month fall since the financial crisis. October 2008 was the last the UK’s benchmark index fell as much over a month.
Across global stock markets, a huge $3 trillion in value has been lost this week, with City traders referring to the turn of events as ‘a bloodbath’.
Travel companies have been hardest hit. The EasyJet share price has dropped by over a quarter this week alone – down 26%. Package holiday operator TUI is down 23% and British Airways parent AIG and Carnival the cruise operator both also tumbled. But despite a sobering 4 days, all four companies will reflect it could have been worse. The share price of Norwegian Air Shuttle, the Scandinavian country’s largest airline, has been chopped in half.
It currently looks unlikely that Friday will bring much respite as Asian markets continued to decline this morning. China’s SSE Composite closed the last session of the week to a 3.71% loss, the Hang Seng was down 2.5% and Japan’s Nikkei 3.67%.
Financial markets analysts and economists have warned that the worst may still be to come. UBS told clients in a note that the rate of new coronavirus cases confirmed this week, many in new countries and with infections coming from unknown sources “broadens and lengthens the potential impact” of the outbreak.
Economists have downgraded global growth forecasts and warned stock markets could fall by 20% before the situation is brought under control. The good news is that