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Global stocks have plunged again despite central banks around the world announcing a coordinated effort to ease the effects of the new coronavirus.

The Dow Jones index closed 12.9% down after President Donald Trump said the economy “may be” heading for recession.

Meanwhile, London’s FTSE 100 ended 4% lower, and other major European markets saw similar slides.

On March 15, the Fed cut its interest rates by 100 basis points to a target range of 0% to 0.25% and said it would offer at least $700 billion for support to the markets in the coming weeks.

The move was part of coordinated action announced alongside the eurozone, the UK, Japan, Canada, and Switzerland.

It comes as local officials across the US shut schools, restaurants and bars, sports leagues cancel tournaments, and retailers such as Urban Outfitters, Nike, and Gap announce hundreds of temporary store closures.

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Speaking after the announcement, Fed chairman Jerome Powell said: “The virus is having a profound effect.”

Investors are worried that central banks now have few options left to combat the impact of the pandemic.

In New York, steep falls as markets opened triggered another automatic halt to trading, which is meant to curb panic selling. Before last week, such halts, known as circuit breakers, had not been used in more than two decades.

However, the sell-off continued after the 15-minute suspension, with the Dow losing nearly 3,000 points or 12.9%, its worst percentage drop since 1987.

The wider S&P 500 dropped 11.9%, while NASDAQ dropped 12.3%. All three indexes are now down more than 25% from their highs.

In London, companies in the travel sector saw big falls. Share in holiday company Tui sank more than 27% after it said it would suspend the “majority” of its operations. BA-owner IAG fell more than 25% after it said it would cut its flight capacity by at least 75% in April and May.

The FTSE 250, which includes a number of well-known UK-focused companies, ended down about 7.8%.

All the main European share indexes fell sharply, though they later regained some ground. France’s Cac 40 index fell more than 5.7% and Germany’s Dax dropped more than 5.3%.

In Asia, Japan’s benchmark Nikkei 225 closed down 2.5% and the Shanghai Composite in China ended the day 3.3% lower.

Oil prices, which have been shaken by a price war between exporters, fell again. Brent crude dropped by more than 10% to less than $32 a barrel while West Texas International crude fell more than 8% to less than $30 a barrel.

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Image by Oli Hale from Pixabay

London’s FTSE 100 index is facing its worst day since the financial crisis after it fell 8% in early trade, wiping billions off the value of major companies.

The UK’s top share index drop follows global falls as a row between Russia and Saudi Arabia saw oil prices plunge by more than a fifth.

Shares were already reeling from fears of the impact of the coronavirus as cases globally continue to rise.

March 9 has already been dubbed “Black Monday” by analysts who described the market reaction as “utter carnage”.

The FTSE 100 index fell more than 8% in the first few minutes of trade, before recovering slightly.

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Oil prices are down more than 20% with Brent crude trading at $35.98 a barrel.

Oil companies saw the biggest falls, with shares in Shell and BP both down by about 15%, while Premier Oil saw its shares more than halve in value.

The hefty falls were also seen elsewhere in Europe, with stock markets in France and Germany also opening more than 7% lower. Norway – a major oil exporter – saw its main stock exchange fall 12% in early trade.

The price of oil had already fallen sharply this year as the coronavirus disease began to spread internationally, with demand for fuel expected to decline.

Last week, oil exporters’ group OPEC – which includes Saudi Arabia – agreed to cut production in order to support prices.

However, it also wanted non-OPEC oil producers such as Russia to agree to cuts, and on March 6 Russia rejected the plans.

In response, Saudi Arabia has cut its official selling prices for oil and plans to increase production. The move is seen as Saudi Arabia flexing its muscles in the oil market to make Russia fall into line.

Asian investors also reacted to a slump in Chinese export figures and the shrinking of the Japanese economy.

In China, the benchmark Shanghai Composite share index fell 3%, while in Hong Kong, the Hang Seng index sank 4.2%.

On March 7, China released import and export figures for the first two months of the year. Exports fell by 17.2% while imports dropped by 4%. This gave the Chinese economy a trade deficit of $7.1 billion as it struggles with the economic impact of the coronavirus outbreak.

Meanwhile, Japan’s economy shrank at a faster rate than initially estimated in the final three months of 2019, according to the latest official figures.

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