Stocks crumble as California and Italy introduce emergency coronavirus measures
Global stocks fell sharply on Thursday, as concerns about the spread of coronavirus and the economic side effects bothered investors again.
Stock markets across Europe opened either flat or marginally lower on Thursday morning but began drifting as first US futures turned negative and then US markets opened lower.
By 2.45pm UK time, the FTSE 100 (^FTSE) was down by 1.8%, the German Dax (^GDAXI) was down 2.1%, and the CAC 40 (^FCHI) in France was down by 2.3%.
US stock markets opened sharply lower, following a day of strong gains on Wednesday. After 15 minutes of trading, the S&P 500 (^GSPC) was down 2.5%, the Dow Jones Industrial Average (^DJI) was 2.6% lower, and the Nasdaq index (^IXIC) was down 2.2%.
The slide for stocks came as Italy and California put in place emergency measures to deal with outbreaks of coronavirus.
Italy announced the closure of all schools in the country for 10 days, as COVID-19 cases passed 3,000 in the country and deaths from the virus passed 100.
California governor Gavin Newsom declared a state of emergency as the state recorded its first death from COVID-19. Newsom said the measures would “help the state further prepare our communities and our healthcare system in the event it spreads more broadly.”
Adam Vettese, a UK Market Analyst at eToro, said: “Italian schools and universities are all closed, California has declared a state of emergency and increasingly company updates are coming in with coronavirus caveats, warning investors on impacts to revenues as a result.”
ITV (ITV.L) was of the biggest fallers on the FTSE 100, down 10%, after warning coronavirus was putting off holiday companies from TV advertising.
Airbus (AIR.PA) fell 3.3% in Paris after Bloomberg reported the aerospace company could cut manufacturing this year due to a coronavirus-linked order slowdown. Rolls-Royce (RR.L), which makes engines for Airbus, was down 5.5% in London.
The FTSE 100 was also dragged down by resources companies. Steel maker EVRAZ (EVR.L) dropped 12.4%, miner Rio Tinto (RIO.L) fell 2.1%, and BHP group (BHP.L) was down 5.7%. Commodity companies have suffered as global growth forecasts have been downgraded, suggesting less raw materials will be consumed this year. In recent days, both the IMF and OECD have cut their forecasts for global growth in 2020.
On Wednesday, Congress approved $8.3bn (£6.5bn) in emergency funding to tackle the spread of coronavirus, the IMF announced it would make $50bn available to fight COVID-19, and the World Bank pledged $12bn in emergency funding.
These stimulus packages and the surprisingly strong performance of Joe Biden on the Democrat’s ‘Super Tuesday’ had helped US equities to rally on Wednesday. The Dow ended up 4.5%.
