Stocks struggled yesterday after the World Health Organisation declared a global health emergency over China’s deadly virus, fuelling analyst worries for world economic growth.
Only hours before Britain was due to leave the European Union, the London stock market fell as a stronger pound hurt exporters.
The rest of Europe’s key markets extended early losses to close more than 1% down on the day.
London’s FTSE 100 closed 1.3% down at 7,286.01 points, Frankfurt’s DAX 30 ended 1.3% lower at 12,981.97 points and Paris’ CAC 40 finished the day with a 1.1% fall to 5,806.34 points, while the EURO STOXX 50 lost 1.4% at 3,640.91 points.
Asian equity markets had earlier already been gripped by virus worries in a volatile end to the week.
On Wall Street, opening losses deepened over the morning, with the DJIA index down about 450 points approaching midday.
The novel coronavirus epidemic, which originated in the central Chinese city Wuhan, has so far killed 213 people.
“Unless a cure is found, this could push a fragile world economic recovery into reverse,” warned Douglas McWilliams, deputy chairman at British research group the Centre for Economics and Business Research (CEBR).
Oxford Economics analysts said that the virus outbreak would have a large short-term impact on Chinese economic growth and possibly curb global GDP growth by 0.2 percentage points this year.
“It’s increasingly apparent the disease is becoming an economic as well as a public health concern,” they said.
The WHO invoked a global health emergency on coronavirus — but stopped short of recommending trade and travel restrictions that could have had a bruising effect on China, a key global growth engine.
Airlines have begun cancelling or curtailing flights to and from China, and a number of governments are recommending citizens do not visit the country.
Investors initially applauded the WHO’s move, plunging back into markets that have lost altitude over recent days as the 2019-nCoV crisis has worsened.
“Coronavirus fears continue to remain a dominant driver of market sentiment, with the continued proliferation of the virus providing a huge cause for concern,” noted IG analyst Joshua Mahony.
“Growth fears remain relevant as the virus continues to spread,” he also warned.
Separately, the EU’s official statistics agency announced yesterday that the 19-member single currency area had already suffered a sharp slowdown after a turbulent year of Brexit uncertainty and trade spats with US President Donald Trump.
The eurozone economy grew 1.2% over the year, down from 1.8% in 2018 and well off the 2.7% seen in 2017.
Oil prices, a gauge for expected economic growth, fell sharply.
from Gulf Times https://ift.tt/3b07pJr
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