Global stock markets collapsed on Friday and oil tumbled on heightened panic over coronavirus and its predicted devastating damage to global economic growth, dealers said. Haven investments gold and the yen surged as the World Health Organisation (WHO) warned that the epidemic must be taken seriously. In midday deals, the Paris stock market tanked 4.1 per cent, Frankfurt dived 3.9 per cent, London shed 3.4 per cent, Madrid lost 3.6 per cent and Milan tumbled 3.8 per cent in a fierce global markets selloff that began about two weeks ago. With no end in sight to the spreading COVID-19 disease, Tokyo stocks shipped 2.7 per cent by the close, Shanghai fell 1.2 per cent and Hong Kong erased 2.3 per cent on heightened investor panic. The benchmark Nikkei 225 was down 3.17 per cent or 676.57 points at 20,652.55 at the midday break, while the broader Topix index was down 3.18 per cent or 48.13 points at 1,467.58. The dollar dipped to below 106 yen in Tokyo morning hours and ‘that prompted further sell orders’, Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary. Expectations that the Bank of Japan would move to expand buying of exchange trade funds to support the market prompted some bargain-hunting purchases in early trade ‘but disappointed investors are now selling’ as no such move by the central bank was seen, he added. Oil, already slumping on virus-linked demand fears, extended losses to more than 5.0 per cent on reports Russia wants to delay deeper output cuts recommended by its OPEC allies. ‘Stocks are on the back foot once again, with markets tumbling amid continued growth in the coronavirus crisis,’ said analyst Joshua Mahony at IG trading group. ‘The stimulus-led rebound in global stocks has been short-lived, with fears over an escalation of the coronavirus crisis providing yet another bout of selling across European markets.’ While governments and central banks have unleashed or prepared to roll out stimulus measures, the rapid spread of the disease and rising death toll are putting a strain on economies and stoking concerns of a worldwide recession. The US Federal Reserve sprang a surprise half-point interest rate cut on Tuesday in an attempt to stem devastating fallout. But as coronavirus continues its rapid spread — almost 1,00,000 people in 85 countries have now been infected — investors are fleeing risk assets such as stocks for financial havens. ‘With the economic impact of coronavirus large and rising, policymakers in advanced economies are being forced to react,’ said economist Adam Slater at research group Oxford Economics. ‘But conventional monetary and fiscal options like the US Federal Reserve’s recent emergency rate cut, may not be enough.’ WHO chief Tedros Adhanom Ghebreyesus meanwhile warned that ‘this is not a drill’ as outbreaks surged in Europe and the United States, where medical workers warned over a ‘disturbing’ lack of hospital preparedness. With dealers flocking to safety and yields on US Treasuries at record lows, gold has rocketed more than five per cent this week to sit at more than seven-year highs. In oil markets, Brent North Sea crude dived to $47.02 per barrel, the lowest levels since July 2017. WTI tumbled to $43.28 — the lowest since late 2018. ‘Over the past month, forecasters have slashed their oil price estimates quicker than you can say ‘pass the hand sanitiser’,’ said PVM analyst Stephen Brennock. In short, COVID-19 is in the midst of an international offensive and the worst effects are yet to be felt. Global oil demand destruction is therefore poised to intensify.’ News that OPEC ministers had recommended a huge production cut of 1.5 million barrels a day to offset the impact of the virus was unable to provide traders with any lift. There are concerns over whether key producers outside the group — Russia in particular — will follow the advice. World oil prices have wiped out more than a fifth of their value so far in 2020. On Thursday Wall Street stocks suffered another bruising rout led by airlines and other travel-oriented shares. The Dow Jones Industrial Average ended down around 970 points, or 3.6 per cent, at 26,121.28. The broad-based S&P 500 slumped 3.4 per cent to 3,024.94, while the tech-rich Nasdaq Composite Index slid 3.1 per cent to 8,738.60. The Sao Paulo stock exchange plunged nearly 5 per cent on Thursday on fears over the economic impact the new coronavirus outbreak will have on Brazil, whose largest trading partner is China. The Ibovespa index plunged more than 6 per cent before recovering to trade down 4.86 per cent shortly before closing. Airline stocks were hit particularly hard, with carriers Gol and Azul down more than 19 per cent and 14 per cent, respectively, as the outbreak continued to severely disrupt the global travel industry.
