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Coronavirus: £100bn wiped off FTSE as outbreak spreads in Europe

Ben Chapman
Reuters

Almost £100bn has been wiped off the UK's blue-chip share index in just two days amid growing fears of a coronavirus pandemic.

Stock markets across Europe tumbled for a second straight session as Spain, Switzerland Croatia and Austria all confirmed their first cases of the deadly virus, formally known as Covid-19, while Italy became the worst-hit country in Europe with 260 people infected and 10 confirmed deaths.

The news sparked a sell-off of shares in European markets which sent the FTSE 100 down 2 per cent to 7014.13. The drop extended Monday's 3.3 per cent fall, the biggest single-day plunge in four years.

France’s CAC 40 index and Germany’s were down 2 per cent, while in Spain the IBEX 35 shed 2.4 per cent.

European eyes will now be fixed on Italian efforts to curb the spread of the virus, said Josh Mahony, senior market Analyst at IG.

“With European borders open and the Italian ‘patient zero’ still unknown, things could easily turn from bad to worse in the efforts to keep the coronavirus at bay," he added.

“With tourism to and from China plummeting, there is little reason to expect any different in Europe if this virus spreads throughout the continent.

“The declines seen for largely European-focused airlines such as easyJet and Ryanair highlight the increasing fear that we will see travel locked down closer to home, with obvious knock-on implications for consumer activity should that occur.”

Holiday giant TUI fell another 3 per cent, while Holiday Inn owner Intercontinental Hotels Group was 1 per cent down.

British Airways owner International Airlines Group was nearly 1 per cent lower after falling more than 9 per cent on Monday.

Parts of China’s economy have been brought to a standstill thanks to lockdowns and other measures to contain Covid-19.

The prospect of similar controls being implemented in European cities could result in further falls for shares in the coming days and weeks, Mr Mahony said.

Michael Hewson, chief market analyst at CMC Markets, warned the virus was likely to cause more problems for shares.

He said: “There is no question financial markets are coming round to the realisation that this particular crisis is likely to have a slightly longer shelf life than many thought was the case a couple of weeks ago.

“There appears little prospect that financial markets look likely to settle down in the short term, which means investors will have to get used to an extended period of uncertainty and volatility."

US stocks were not immune from the market turbulence, slipping 1 per cent in early trading after a dramatic 1,000 fall in the Dow Jones on Monday that wiped out all of the index’s gains so far this year.

Energy companies fell as oil prices dipped on the expectation of an economic slowdown caused by the virus.

Additional reporting by PA

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