Covid-19 has wreaked havoc on the world’s financial markets after the World Health Organization (WHO) declared the outbreak a pandemic, and the US banned all European flights.
European stocks opened sharply lower on Thursday with the London FTSE down over five percent. Jet engine maker Rolls-Royce led the losses, as the company’s shares were down 13 percent, and airline stocks were also hit hard.
German shares were also down, with the DAX dropping five percent to hit its lowest level since 2016. Meanwhile, the French CAC 40 lost over seven percent. Stocks in Italy, the worst-affected country by coronavirus outside of China, were down around six percent. Russia’s main index on the Moscow Exchange opened almost six percent lower.
Dax plunges below 10k, hits lowest level since 2016. pic.twitter.com/1U0RWaFDps— Holger Zschaepitz (@Schuldensuehner) March 12, 2020
The losses on Asian markets were led by Australia, with its key All Ordinaries index closing down 7.23 percent. It was followed by India’s Mumbai Sensex, which is down over seven percent, and Japan’s Nikkei 225, which lost 4.4 percent.
The Hong Kong Stock Exchange had fallen 3.6 percent by the end of the trading day, while the Shanghai Composite was down 1.52 percent.
On Wednesday, US stocks suffered massive losses, with the Dow Jones Industrial Average losing 1,464 points or almost 5.9 percent, while the S&P 500 plummeted nearly five percent.
“Coupled with the World Health Organization’s declaration that the Covid-19 outbreak is a pandemic, the European travel ban has created a perfect storm for markets,” Ayush Ansal, chief investment officer at Crimson Black Capital, told The Guardian newspaper.
The sharp sell-offs came after US President Donald Trump ordered the suspension of all travel from Europe to the United States for 30 days. The restrictions came shortly after the World Health Organization announced that the Covid-19 can be characterized as a pandemic.