Dow Jones suffers biggest one-day fall as coronavirus fears grip Wall Street

Louis Ashworth
·2 min read
Trader
Trader

Stock markets in the US and Europe plunged into correction territory ­on Thursday as panic over the spread of coronavirus triggered a wave of fresh sell-offs.

On Wall Street, the Dow Jones recorded its biggest one-day point drop ever, closing down 1,191 points at 25,760, while in London the FTSE 100 dropped another 3.5pc to 6796.4.

The blue chip index’s fall wiped £62bn off the value of British blue-chip companies, hitting millions of savers’ pensions, and dragging the index into a correction, meaning it is now more than 10pc down from recent highs. The American Dow, pan-European Stoxx 600 and French and German markets all entered corrections too in another brutal day of selling.

Markets spent weeks pushing upwards despite concerns about the China-centred outbreak’s impact on the global economy. But the virus’s rapid spread into Italy this week broke the morale of Western investors, who have been brutally selling off since the weekend.

US shares plummeted from recent highs as Wall Street’s investment banking giants slashed their outlooks for corporate growth in the coming year. The Dow Jones has shed 12pc – or almost 3,600 points – this week alone.

Analysts at Goldman Sachs now expect top US companies to generate no profit growth this year as the virus crushes demand and trade seizes up. JP Morgan analysts also reduced their estimates for US profits but said that a wave of government spending to combat the damage could boost markets.

Meanwhile, the International Monetary Fund said it is likely to cut global growth forecasts. A spokesman said: “Clearly the virus is going to have an impact on growth.” European Central Bank chief Christine Lagarde told the Financial Times her organisation is monitoring the virus but it is too early to know if the outbreak will cause a long-lasting economic shock.

More than $300bn (£233bn) was wiped off the value of European shares during the trading session, with the Stoxx 600 suffering its second biggest daily fall since the Brexit referendum in 2016. The index was at record highs last week, but dropped sharply on Monday and Tuesday. Markets bounced back slightly on Wednesday before resuming their plunge yesterday.

Traders are piling into safe-haven ­assets to protect their money, with gold edging up and the yield on US 10-year government bonds – which falls when demand is higher – hitting a new all-time low.

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