European stocks fell on Wednesday after dire warnings from US president Donald Trump raised fears that the coronavirus pandemic would cause a global recession.
Late on Tuesday, Trump warned that the US faces a “very very painful two weeks,” while scientists cautioned that the virus could kill up to 240,000 Americans.
“The president finally conveyed the message that 100,000 to 240,000 could die after weeks of minimising the effort and failing to force the production of ventilators,” said Sebastien Galy, a senior macro strategist at Nordea Asset Management.
Trump’s message resonated across global equities markets because it laid bare the “sheer consequences of this crisis,” Galy said on Wednesday.
“I want every American to be prepared for the hard days that lie ahead. We’re going through a very tough few weeks,” Trump said on Tuesday.
The sharp losses in Europe followed a weak trading session Asia.
Japan’s Nikkei (^N225) declined by 4.5% after purchasing managers’ index data suggested that activity in the country’s manufacturing sector had shrunk at its fasted pace in more than a decade.
“Overall, the cascading impact of COVID-19 on the global economy is diminishing the chances of a V-shaped recovery,” said Joe Hayes, an economist at IHS Markit, referring to a sharp recession that is nonetheless followed by a rapid upswing.
The KOSPI Composite Index (^KOSPI) in South Korea closed 3.9% in the red.
Futures were also pointing to a lower open for US stocks on Wednesday.
March was the worst month for US stocks since the financial crisis. The S&P 500, which fell 12.5% in the month, is down 20% so far this year.