European stocks are set for their worst week in more than a decade, as escalating coronavirus fears prompted investors to sell off shares in droves on Thursday.
The STOXX 600 index (^STOXX) was down by more than 3.7% at the closing bell, meaning the broad measure of European equities has now lost almost 9% since the beginning of the week.
A continuation of the sell-off on Friday could push the losses to levels not seen since the financial crisis.
An opening bell “plunge” on the Dow Jones “sparked an acceleration in the session’s coronavirus carnage,” said Conor Campbell, a financial analyst at Spreadex.
Stocks are now in so-called “correction territory,” meaning that they have lost 10% since their recent all-time highs.
“This is one of the worst weeks in recent memory — and terrifyingly, it’s not over yet. Friday is a tricky proposition,” he said.
As coronavirus spirals into a public health emergency in Europe, economists are now expecting a direct hit to the eurozone’s economy.
Bank of America on Thursday lowered its 2020 eurozone growth forecast from 1% to 0.6%, putting the 19-member common currency area on track for its weakest growth in six years. Credit Suisse similarly slashed its forecast.
“The sharp declines in equity markets in the last week have turned investor sentiment on its head in a fashion that is almost schizophrenic in nature,” said Michael Hewson, the chief market analyst at CMC Markets.
“From the unshakeable optimism seen at the beginning of the year, investors have done a complete U-turn switching from excessive optimism to outright pessimism in less than a week.”