Coronavirus: Fear
returns to stock markets
London's FTSE 100 share index fell more than 3% and there were similar declines in other European markets.
In the US, upbeat data on hiring and unemployment failed to buoy investors.
The
Dow Jones Industrial Average closed almost 1% lower, while the Nasdaq slumped
1.8% and S&P 500 ended down 1.7%.
The
monthly report from the US Labor Department found US employers added 273,000
jobs in February - significantly beating expectations - while the jobless rate
fell back to near a 50-year low of 3.5%.
The
report also revised up estimates of job gains in January and December, finding
85,000 more than previously understood.
The
surveys, however, reflect data collected before the outbreak intensified. In
recent weeks, global travel has plunged, while work, school and shopping has
been disrupted in many countries.
The economic
strength signalled in the report is a "little like the saying, the car was
in fine condition before being involved in a collision", said Mark
Hamrick, senior economic analyst for Bankrate.com.
"The
new reality, amid tremendous uncertainty, is the world has experienced a
seismic shift," he said.
Earlier on Friday,
markets in Asia had seen big falls, with Japan's Nikkei share index dropping by
2.7%.
The
3.6% drop in the FTSE 100 wiped out the gains seen earlier this week on the
index.
Shares
in travel companies again saw some of the steepest falls.
Banks
also took a hit, as investors anticipate that interest rates might be cut in
order to make borrowing cheaper for companies and consumers to keep the economy
buoyant.
Energy
firms were under pressure as well, after the collapse of a proposal by major
oil producers to keep oil supply in check sent oil prices tumbling more than
8%.
"The
markets didn't even bother with the pretence of a calm start on Friday,
bringing another rough week to a close," said Connor Campbell, analyst at
financial spread better Spreadex.
"The
week's various central bank rate cuts only served to reinforce the seriousness
of the situation."
Earlier
this week, the Federal Reserve, the US's central bank, cut its benchmark interest rate by
0.5 percentage points to a range of 1% to 1.25% in an attempt to ease investor
concerns.
Many
analysts predict it will cut rates again - perhaps as soon as its meeting this
month.
As
traders seek less risky investments, they are turning to government bonds,
sending prices higher.
The
bond market - which is many times larger than the stock market - includes
tradable loans to governments and businesses. Yields - how much investors will
recoup in interest from the loans - drop as the price of the loan rises.
Benchmark
10-year UK government debt now only offers a 0.24% return - a record low. In
the US, the yield on a 10-year Treasury also fell to a record low, falling
below 0.7%.
Blog Source www.bbc.com
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