London’s FTSE 100 index suffered its worst session since the Black Monday crash of 1987, falling 10.87 per cent by the close of trading on Thursday, March 12.
More than £191bn ($240bn, €215bn) was wiped from the index’s value as investors reacted to the continued spread of Covid-19 and US president Donald Trump’s decision to ban European travel, excluding the British Isles.
Airline stocks particularly suffered, with the Anglo-Spanish International Airlines Group (IAG) closing down 8.5 per cent, easyJet falling 6.5 per cent and Ryanair losing a further 4.7 per cent.
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European markets fared even worse, with the leading indices in both France and Germany falling more than 12 per cent. Again, airlines suffered some of the largest falls.
The Oslo-listed Norwegian Air Shuttle, which recently expanded its transatlantic operation, plunged by 25.6 per cent. The carrier is expected by some to follow Flybe’s collapse having already been forced to cancel more than 3,000 flights as a result of the coronavirus outbreak.
The more domestic FTSE 250 index also suffered in Thursday trading, down 9.4 per cent. One of the biggest losers, Cineworld, has signalled that it may not be able to pay its debts as customers increasingly stay home. The cinema chain’s share price has fallen 73.65 per cent since the start of the year.
The widespread sell-off in British markets came despite the coordinated efforts of the UK government and the Bank of England (BoE) to bolster the economy through rate cuts and stimulus.
While such intervention was not able to avert major losses, Thursday’s drop was arguably exacerbated by the European Central Bank’s (ECB) decision to hold interest rates
With the World Health Organisation (WHO) declaring Covid-19 a pandemic, it would appear that central banks and governments can only do so much to counter the economic impact.
American markets also plunged in Thursday trading, with the Dow Jones, Nasdaq and S&P 500 all falling by more than 9 per cent.
Asian markets reacted wildly to the latest market developments in Friday trading. Australia’s S&P/ASX 200 index closed up 4.42 per cent having fallen by more than 8 per cent earlier in the session. Meanwhile, Japan’s Nikkei 225 index closed down 6.08 per cent.
European markets have opened up at the start of Friday trading, thanks in part to the €120bn stimulus package outlined by ECB chief Christine Lagarde.
By mid-morning the FTSE 100 has gained 2.17 per cent, while the FTSE 250 stands up 0.13 per cent.