Risk appetite falls

Coronavirus panic prompts global markets sell-off

City of London

London was one of the biggest fallers (pic: Terry Murden)

Markets suffered one of their worst ever weeks as a sharp rise in the number of coronavirus cases outside China raised fears of a global pandemic and stifled investor appetite.

The Dow Jones tumbled by almost 1,200 points on Thursday – its worst ever one-day session – and the FTSE 100 tumbled 3.5% to its lowest since January 2019.

Heavyweight banks, miners and oil stocks were among the biggest fallers. Some markets around the world have now fallen by more than 10% from their recent highs, putting them into correction territory and heading for their worst week since the darkest days of the financial crisis 12 years ago.

The mass sell-offs are a sharp contrast to the beginning of February, when the Dow reached all-time highs as investors regarded the virus as a short-term and containable threat.

That mood has changed quickly as companies such as Apple, Diageo and Microsoft warn that profits could take a hit.

The number of new infections being reported around the world now surpass those in China, dashing hopes that the epidemic would be short-lived and economic activity would return to normal.

China is now facing prolonged shutdowns, closures and layoffs. Airlines, hotels and cruise ship companies among those suffering the steepest falls in their share prices.

The slump continued early on Friday morning with Japan’s Nikkei 225 index plunging by more than 3%. The Australian Securities Exchange closed down 3.3%.

Oil prices have also taken a hit – plummeting to their lowest level in more than a year.

Gold, which investors often flock to during times of uncertainty, is trading close to the seven-year high of $1,688.90 hit earlier this month.

Amid the economic panic, EY’s Item Club bravely predicted the Scottish economy will grow by 0.8% GVA in 2020 and subsequently narrow the growth gap between Scotland and the UK by 2022.

While it is expected to trail UK economic growth, 1.4% GVA in 2019 and 1.2% GVA in 2020, the growth gap between the two will decrease year-on-year from 0.5% GVA in 2019 through to 0.2% GVA in 2022.

However, the research was conducted ahead of recent sharp revisions in forecasts in response to the coronavirus.

Comment: Mother nature is telling the world to slow down

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