World’s Stock markets plunge after WHO declares pandemic

Share markets in the US were sharply lower on Wednesday, with losses accelerating after the World Health Organization declared the coronavirus outbreak a pandemic.

The Dow Jones plunged more than 1,600 points or 6.5%, while the S&P 500 and Nasdaq fell more than 5.6%.

London’s FTSE 100 slid 1.4%, while other European markets also declined.

The Dow’s fall brings the index to levels roughly 20% below its recent high.

That threshold indicates the start of a “bear market”, which often accompanies economic recession.

The falls come as countries rush to approve spending to shield economies from reduced activity due to the virus.

UK Chancellor Rishi Sunak has unveiled a £30bn package to fight the outbreak on the same day that the Bank of England delivered an emergency cut in interest rates.

In the US, the White House and Congress are trying to come to agreement on economic relief after President Donald Trump’s proposal of a tax cut for workers failed to garner widespread support.

Treasury Secretary Steven Mnuchin said on Wednesday that the administration hoped to extend deadlines for tax payments, cover the cost of sick leave for staff forced to stay home and provide loan guarantees for affected industries, such as airlines.

“We are not only focused on the health issues, but the economic issues,” he said.

The New York branch of the US central bank also said it would inject money into the financial system by making more overnight loans available to banks, its second such move this week.

The Fed last week made its first emergency rate cut since the financial crisis in an effort to keep money flowing.

The moves come as the spread of the virus, despite hopes of containment, has rapidly reset expectations for global growth this year.

On Wednesday, economists at IHS Markit said global growth was likely to slow to 1.7% this year, down from the 2.5% it forecast last month.

The firm warned that the outbreak was likely to push Europe, which was already experiencing low growth, into recession and reduce US growth to 1.8%.

The coronavirus was not the only thing on investors’ minds.

Markets have been slammed this week by a plunge in oil prices, after oil exporters said they would increase output rather than make coordinated cuts. On Wednesday, oil prices were down more than 3%.

And on the Dow, the biggest drag was US planemaker Boeing, which fell more than 14%.

The firm has been in crisis since the crashes of two of its 737 Max planes, which have since been grounded globally for about a year. On Wednesday, it reported 46 cancellations, which were not made up by new orders.

It is also reportedly freezing hiring and being forced to draw on a $13.8bn loan, in part because of the coronavirus.

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