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FTSE 100 on track for worst day since 1987 as coronavirus panic grows

Edmund Heaphy
Finance and news reporter
A television screen on the floor of the New York Stock Exchange headlines market activity. (Richard Drew/AP)

London’s FTSE 100 (^FTSE) is on track for its worst day since 1987, as investor panic about the coronavirus deepened and traders sold off stocks in droves.

The index, which tracks the UK’s top 100 listed companies, was down by more than 9.2% on Thursday.

If the losses hold, they would exceed those experienced during the peak of the 2008 financial crisis.

It would be the third-worst day in history for the FTSE 100, eclipsed only by the two days of severe market crashes seen during the 1987 Black Monday crisis.

“I have never seen such aggressive, relentless selling,” Neil Wilson, the chief market analyst at Markets.com, told Yahoo Finance, calling the performance “disastrous.”

European stocks plunged across the board on Thursday after US president Donald Trump issued a sweeping 30-day ban on travel from the continent to combat the spread of the virus.

The pan-European STOXX 600 index (^STOXX) also fell by more than 9% in the wake of the restrictions, putting it on track for its worst day in history.

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Germany’s DAX (^GDAXI) and France’s CAC 40 (^FCHI) sank by almost 10%, suggesting that a stimulus package announced by the European Central Bank has done little to allay fears.

ECB president Christine Lagarde on Thursday said that the coronavirus pandemic had resulted in “heightened market volatility,” and called on eurozone governments to launch an “ambitious and coordinated fiscal response” to the fallout.

“The latest indicators suggest a considerable worsening of the near-term growth outlook,” she said, noting that “necessary” virus containment measures were “adversely affecting economic activity.”

The US travel restrictions, which will apply to the 26 countries in the European Union’s Schengen border-free travel area, will go into effect from midnight on Friday, and do not apply to the UK or Ireland.

FTSE 100 heading for biggest drop since 1987. (Yahoo Finance)

Trump also unveiled stimulus measures valued at $250bn (£195bn), including support for small businesses, and asked lawmakers to introduce tax relief for workers,

But his address, which came just hours after the World Health Organization declared the outbreak a pandemic, also did little to instil confidence about efforts to contain the virus and raised the spectre of a further dent to global growth.

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“Taking the view that the president’s travel ban has only further heightened the likelihood of a global recession, while suggesting the stimulus plan lacks the necessary force to combat the impact of the outbreak, investors fled a market landscape that increasingly looked like a crime scene,” said Conor Campbell, a financial analyst at Spreadex.

“Hot on the heels of the World Health Organization declaring a pandemic, and with the UK preparing to enter a phase of social distancing, to say Trump’s plans were greeted with scepticism is an understatement,” said Campbell.