Global shares suffer worst week since financial crisis

28 Feb 2020

US markets have suffered their worst week since the global financial crisis of 2008, as fears over the impact of the coronavirus continued to grip investors.

The three main US indexes ended the week down 10% or more from last Friday, despite a last-minute rally in prices.

Earlier, the main European markets fell sharply, with London's FTSE 100 index down 3.2% for the day.

Investors are worried the coronavirus could spark a global recession.

The Dow settled 1.4% lower on Friday, recovering from earlier lows, while the S&P sank 0.8% and the Nasdaq was roughly flat.

Amid the sell-off, Federal Reserve chair Jerome Powell put out an unusual statement, saying the US central bank was "closely monitoring" developments.

"The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity," he said. "We will use our tools and act as appropriate to support the economy."

The news of more coronavirus cases, notably in Italy, has raised concerns of a much larger economic effect than previously expected.

Bank of England Governor Mark Carney on Friday warned the outbreak could lead to a downgrade of the UK's growth prospects.

Other countries are also reassessing their economic forecasts, as hundreds of firms warn of disruptions to their supply chains and a decline in consumer demand.

US tech giants Apple and Microsoft are among the companies that have said their business will be affected, while investment bank Goldman Sachs warned on Thursday that the coronavirus is likely to wipe out any growth in US company profits this year.

Shares in airlines have been especially hard-hit as travel bans are imposed and companies limit staff travel. On Friday, airline group IAG - which owns British Airways and Iberia - said its earnings had been affected by "weaker demand" as a result of the outbreak.

In Europe, Germany's Dax index fell 4.2%, while France's Cac 40 index sank 3.9%.

Earlier on Friday, in Asia, Japan's Nikkei 225 index dropped 3.7%, bringing its fall for the week to more than 9%. China's Shanghai Composite index also fell 3.7% on Friday.

Traders fled to less risky investments, such as government debt, sending bond yields to new lows. Meanwhile, oil prices also fell on fears the virus would hurt demand, with Brent prices dropping more than 3% to about $50 a barrel on Friday, the lowest level for more than a year.