Stock markets slide amid fears coronavirus spread could hit growth

Stock markets have slumped around the world as the deadly coronavirus continued to spread across Europe and Asia, with airlines and tourism companies taking a heavy hit.

Growing fears of a coronavirus pandemic pushed shares sharply lower, as investors rushed to buy “safe haven” investments such as gold, sending gold prices surging to a seven-year high of $1,683 (£1,303) an ounce.

The FTSE 100 index in London lost 240 points to 7163.70, a 3.2% drop. Among the worst-hit stocks were the budget airline easyJet, down 12.6%, tour operator Tui, down 7.9%, and British Airways owner IAG, down 7.5%. Shares in Carnival, the cruise ship operator which has faced an outbreak of the virus on its Diamond Princess cruise ship, shed 6.4%.

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Italy is at the centre of the coronavirus crisis in Europe, reporting its fourth death on Monday as the the number of cases in the country rose to to 152, the highest number outside Asia. The eurozone’s third-largest economy is already contracting and the rapid spread of the virus has sparked fears of a recession. Italian authorities have responded by locking down 12 cities in the north of the country, and the Venice carnival has also been cut short by two days.

The Italian stock market tumbled 1,095 points to 23,676.17, a 4.3% fall, putting it on track for its worst day since 2016. Elsewhere in Europe, Germany’s Dax index fell 3.5% while France’s CAC 40 lost 3.7%.

In Asia, Hong Kong’s Hang Seng index fell 1.8%, while South Korea’s Kospi slumped 3.9%. The country has seen coronavirus cases spike to 763. Japan’s stock market was closed for a scheduled holiday.

Chris Beauchamp, the chief market analyst at online trading firm IG, said: “It has been a while since the term ‘sea of red’ was last deployed to describe the market action, but it seems appropriate this morning.

“The idea that the coronavirus has been fully contained has been firmly banished, and investors are now on notice to expect more cases and, sadly, more deaths. This means the economic forecasts of the impact, such as they are, will need to be revised, with a greater impact now to be expected.”

Oil prices have fallen as global demand will decline due to the virus outbreak and China is the world’s biggest importer of oil. Brent crude tumbled $2.66 a barrel to $55.69, a 4.6% fall.

Warren Patterson, head of commodity strategy at ING, said: “We believe the virus’ effect on oil demand will shave some 400,000 barrels a day from global consumption growth, taking us to the lowest level in nearly a decade.”

As the virus spreads, the Beijing motor show in late April has been postponed. The owner of Primark owner, Associated British Foods, warned on Monday that there could be shortages of some clothing lines later this year if factory shutdowns in China are prolonged. ABF sources more than 40% of Primark’s products from China.

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