Closing report: Wall Street couldn’t hold onto its earlier gains, and has posted another loss.

The Dow Jones industrial average ended the day down 123 points, or 0.46%, at 26,957. That’s a new four-month low. The broader S&P 500 ended 0.38% down.

The Nasdaq managed to keep its head, though, finishing a modest 0.17% up.

With new cases reported in Norway, Pakistan and Georgia for the first time today, plus more cases in China, Iran, Italy, South Korea and beyond, the coronavirus is still weighing on markets.

As Oliver Pursche, chief market strategist with Bruderman Asset Management, told MarketWatch.

“The last couple of days have seen like an emotional reaction, as opposed to a fact-based reaction.

The reality is that the data is coming in so quickly and changing so quickly,” he said about the spread of the illness beyond Asia. “It’s really difficult to see that changing over then next three or four weeks.”

The healthcare, utility, basic materials anfd financial sectors all led the recovery in London today.

But consumer-focused firms, such as housebuilders and retailers, fell.

Just in! London’s stock market has clawed its way back from this morning’s one-year low.

The FTSE 100 index of leading UK-listed shares has close 24 points higher at 7042, up 0.35%. Quite a recovery, given it was down 106 points at one stage this morning.

That still leaves the index down around 5% this week, but it suggests the panic over Covid-19 may be easing.

Other European markets also recovered from this morning’s slump, with Italy’s FTSE MIB gaining 1.5% (after two days of chunky falls), and France flat.

Why the recovery, given the coronavirus crisis has hardly gone away?

Well, there will be some bargain-hunting, with investors betting that the index has fallen too far, too fast, in recent days.

Wall Street has also helped. The sight of the Dow Jones jumping by 400 points has calmed investors nerves in Europe.

Connor Campbell of SpreadEx sums up the mood:

The Dow Jones rode in like something of a white knight on Wednesday afternoon, rescuing Europe from its intraday lows.

The Dow added 350 points after the bell, a rebound likely born of nothing more than bargain-hunting investors sweeping in at near-4 month lows. That pushed the index above 27400 – for reference, around 1,100 points shy of its mid-February all-time highs.

US equity markets are “facing this coronavirus like buffalo, with their heads into the storm and marching onwards”, says Neil Wilson of Markets.com.

But with Wall Street up 1.5% today, this optimism may be displaced (and a reminder that even a dead cat will bounce if you drop it far enough).

Here are six reasons why, in his words, the recovery looks “decidedly feline and rather deceased”:

1. Markets are still conditioned to buy on the dip - and what a dip we have had.
2. a drop of 2000 Dow points in 2 days is plenty downside baked in already even if the economy takes a scrubbing in Q1. The market has already priced for a spread of cases in the US & Europe.
3. Donald Trump says if you’re not buying you’re chicken and an MSM putz.
4. No material deterioration in the situation in the US with regards the virus (there is a lot of expected bad news already priced in). But we’re only talking a few hours having passed.
5. Several technicals were indicating oversold conditions.
6. All moves have pullbacks, all trends have countertrends. These are by definition short-lived - or they become the trend. Despite the bounce the bulls are not yet in charge of this.

Newsflash: Wall Street has opened higher, as US traders try to hold their nerve after two days of wild declines.

The Dow Jones industrial average has jumped by 200 points, or 0.75%, at the start of trading. That lifts the index to 27,287, up from last night’s four-month low.

The broader-based S&P 500 is up 0.8%, while the tech-focused Nasdaq has jumped by 1%.

An encouraging start. But don’t forget the Dow lost 1,900 points over the last two days, so this is a very modest recovery.

Some investors may be suspecting, like Royal London, that stock prices look rather attractive.

But others may remember Nouriel Roubini’s warning that there is worst to come, if Covid-19 becomes a full-scale global pandemic...

Not every investors is hammering the sell button today.

Trevor Greetham, head of multi asset at Royal London Asset Management, says he’s “buying the dip” - betting that stocks will soon recover from this week’s tumble.

Greetham argues that the markets have over-reacted to the spread of Covid-19, and that a global recession will be avoided (especially if central banks cut interest rates to support growth, or Donald Trump cuts taxes):

“We are buying the dip in our multi asset funds, moving to a high conviction overweight position in stocks. While it is impossible to know how much economic damage measures to contain the virus will cause over the next few months, markets have a strong tendency to overreact to bad news in the short term and our contrarian investor sentiment indicator is once again registering a buy signal.”

“As longer term investors we find it usually pays off to look on the bright side when others are panicking. Virus disruption is very unlikely to force the world economy into recession. We expect to see a large but temporary hit to economic activity followed by a bounce back later in the year that additional stimulus could make stronger than it otherwise would be.

But Greetham also expects plenty of market volatility in the weeks ahead:

“We are not complacent about the risks. We expect markets to remain choppy for weeks or perhaps months as investors weigh up good and bad news on the outbreak and its impact. We will look to trim equity exposure on rallies and buy on dips during this period.

With inflation low, the longer term prospects for the world economy and stock markets remain positive, especially if additional stimulus is in the offing.”.

Donald Trump will be pleased to hear that Wall Street is expected to open calmly in 90 minutes time.

The Dow Jones industrial average is on track to rise 0.25%, or 75 points, when trading begins.

The Washington Post reports that the president was furious that the Dow plunged by nearly 1,900 points, or 6.5%, during Monday and Tuesday. And apparently he blames health officials for warning US citizens to prepare for an inevitable coronavirus outbreak.

The Post says Trump has cautioned aides against forecasting the impact of the virus over fears that stocks could fall further.

Trump has used the US stock market rally as proof that he’s doing a great job, so any crash would undermine his re-election campaign. But telling health officials to pipe down may be counterproductive, and dangerous.

And as I type, the president has just tweeted that the media are to blame for tumbling markets. He’s planning to hold a press conference on the “Caronavirus” (sic) on the issue later...

After a rough morning, European stock markets are struggling back off the mat as lunchtime approaches.

Most of the indices are still down, but they’ve bounced off their lowest points. Italy’s market has actually turned positive, after several days of heavy selling.

There’s still a lot of anxiety about a Covid-19 pandemic, but investors are reassured to see that Wall Street is expected to open a little higher today (after two whopping falls this week).

• FTSE 100: down 39 points or 0.57% at 6979 -- on track for a one-year low
• German DAX: down 131 points, or 1% at 12,685
• French CAC: down 38 points or 0.4% at 5,641
• Italian FTSE MIB: up 102 points or 0.5% at 23,195

This leave the Stoxx 600 down 0.85%, on track for its lowest close in four months.

Just in: Credit rating agency Moody’s has slashed its forecast for car sales in 2020, due to the economic damage caused by Covid-19.

Moody’s now expects global auto sale to fall by 2.5% this year -- rather worse than its previous forecast of a decline of 0.9%.

That would mean 88 million new cars being sold, down from 90.2 million in 2019.

Sales are expected to fall in Europe, the US and China -- a blow to the industry, which is already struggling to transition away from petrol and diesel cars towards electric.

Moody’s says:

• In the wake of the coronavirus outbreak, auto sales in China likely to drop to 2.9% this year, significantly more than 1% previously expected
• Light vehicle sales in Western Europe likely to fall to 4% in 2020, after a surge in demand late 2019 with cars discounted to meet carbon emissions rules
• US sales will remain weak falling by 1.2% in 2020, then dip by another 0.6% in 2021
• Japan will be the only major auto market to see unit sales growth in 2020

Senior vice-president Falk Frey says:

“Global vehicle sales will decline 2.5% in 2020, narrowing from a 4.6% drop in 2019, but worsening from the 0.9% decline that we had previously projected for this year.

Sales will rebound only modestly in 2021, with growth of 1.5%,”

The Chinese government has attempted to calm fears over its economy.

State TV are reporting that the Communist Party’s Politburo has held a meeting, where they agreed that China’s economic recovery is accelerating.

However, they also warned that the coronavirus outbreak situation in the epicentres of Hubei province and Wuhan is still dire (Reuters reports).

Greek government bonds are weakening, after Athens reports its first coronavirus case.

Greece’s heath ministry says a 38-year-old Greek woman who had travelled
from an area of northern Italy has caught the virus.

This has knocked Greek bonds, pushing up the yield (interest rate) on 10-year debt up to 1.17%, from 0.97% last night.

That’s still a very low bond yield, especially by Greek standards (yields soared over 20% during its debt crisis). But today’s rise indicates investors are concerned that its economy could be hit by the crisis.

The coronavirus scare reached London’s financial district yesterday, when US oil company Chevron sent home about 300 workers from its Canary Wharf offices.

Chevron asked traders and other staff to work from home as a precaution after an employee reported flu-like symptoms, having recently visited a country where coronavirus has been detected.

The company says it acted to protect staff, while the individual is testeed.

“Chevron continues to monitor the situation very closely, utilizing the guidance of international and local health authorities.

“Our primary concern is the health and safety of our employees and we are taking precautionary measures to reduce their risk of exposure.”

Despite the heavy losses this week, global investors are too complacent about the coronavirus.

So says economics professor Nouriel Roubini, in an article in the Financial Times. Dr Doom”, as he’s known, reckons “the worst is yet to come”, as the chances of a global recession rise.

Roubini argues that investors are guilty of several “flawed assumptions”, and need to realise several things:

1) Covid-19 is going to be a global pandemic, and last for longer than first thought.

The view that the economic impact will peak before the end of the first quarter now looks very shaky. The damage to China is severe, and global supply chains are being seriously disrupted, at a time when China accounts for about 20 per cent of global gross domestic product, not the tiny 4 per cent it had at the time of Sars in 2003.

Add to that an economic shock to big economies like Japan, South Korea and Italy. When the disease spreads to other developed and emerging markets, this damage will increase.

2) China’s economy will not rebound quickly, as some economists hoped:

The idea of a V-shaped recovery is nonsensical. Suppose that the best Goldilocks scenario does occur: the shock to China hits only the first quarter and the contagion is mostly contained to the country. If its output shrinks just 2 per cent in the first quarter, that is an annualised contraction of 8 per cent. A V-shaped rebound would therefore require the same annualised growth, which exceeds the 6 per cent that China managed before the virus.

Assuming that China will rebound at this rate in the final three quarters of the year — which would imply growth in 2020 of 4 per cent — is heroically optimistic. It is more likely that a V-shape shows growth returning to a pre-virus annualised level of 6 per cent from the second quarter onwards. In this case, China’s calendar-year growth would be 2.5 per cent.

3) Governments and central banks can’t step in and protect their economies.

Fiscal policy will react very slowly, or not at all, given political and other constraints. Central banks are running out of bullets: how much more negative can the European Central Bank, Bank of Japan and others go on interest rates?

The price of oil has hit a one-year low, as fears intensify about the health of the global economy.

US crude oil has fallen to just $49.88 per barrel, its weakest point since January 2019.

It’s down 1.3% today, and has slumped by 10% in the last week.

Brent crude, sourced from the North Sea, has fallen by 1.5% this morning to $54.11 per barrel (only a two-week low).

The slide comes as San Francisco declares a state of emergency over coronavirus (although there are no cases there yet). There has also been a surge of cases in South Korea and Iran, while France has just reported its second death from the virus.

George Efstathopoulos, multi asset portfolio manager at Fidelity International explains:

Commodity prices took a hard hit amid concerns that the epidemic will curb global demand. Crude oil led declines with a weekly loss of about six per cent, while copper and rubber were both down as of Wednesday. A rush to safe-haven assets, on the other hand, pushed gold prices to a seven-year high this week, and the Japanese yen has rallied too.

European stock markets are now sliding deeper and deeper into the red.

Germany’s DAX has tumbled by another 2.5%, while the UK’s FTSE 100 is now 1.5%, or 106 points, at 6910 (still a one-year low).

It’s turning into a really grim few days for the markets. The EU-wide Stoxx 600 index has lost over 9% since last Wednesday, falling steadily as Covid-19 infections and deaths have kept rising.

Russ Mould, investment director at stockbroker AJ Bell, says investors are now realising that Covid-19 will have a serious impact on corporate profits, as supply chains are hit and demand falls.

European shares were also under significant pressure as several countries on the continent announce their first cases. Germany’s DAX index drops 1.2%, overnight Japan’s Nikkei 225 index was down 0.8%.

The correction for equities reflects the reality that the impact of this outbreak is likely to be far-reaching and lead to pressure on company’s revenue and earnings. Alcoholic drinks maker Diageo becoming the latest high-profile company to flag an impact this morning.

Lufthansa has announced a hiring freeze and is offering employees unpaid leave as part of a range of cost savings measures to attempt to limit the financial impact of the spread of the coronavirus.

The German airline, which has already cancelled all flights to China until the end of March, also said it will expand part-time work options and cancel flight attendant and other personnel training courses from April onwards.

Those that are already on courses will not be hired. The company said it aimed to offer affected trainees “employment contracts in the longterm”.

Lufthansa says:

“In order to counteract the economic impact of the coronavirus at an early stage, Lufthansa is implementing several measures to lower costs.

It is not yet possible to estimate the expected impact of current developments on earnings.”

French food group Danone has also warned that the coronavirus crisis is hurting its business.

The maker of Evian and Volvic bottled water, and Activia, expects to lose around €100m in sales, mostly at its “Waters China” business.

That will wipe out Danone’s revenue growth in the current quarter, leaving like-for-like sales “broadly flat”.

This has forced Danone to cut its sales growth targets - to 2-4%, down from 4-5%.

CEO Emmanuel Faber says:

We start this year under the uncertain clouds of the coronavirus. Our priority is on the health and safety of our employees, business partners, customers and the communities in which we operate, hand in hand with the work of authorities.

I would like in particular to commend and deeply thank our teams in China for their incredible commitment to their mission serving relentlessly families, parents, babies and elderlies despite the difficult conditions. Let me express my support and empathy for the difficulties and challenges they face and my confidence that life will return to normal in China and beyond.

坚强, 中国 Stay strong China.

Newsflash: The FTSE 100 share index has hit a new one-year low at the start of trading.

Covid-19 worries have pushed the blue-chip index down by another 39 points, or 0.5%, to 6978. That’s its lowest level since February 2019.

Travel companies are leading the fallers, again, with holiday firm TUI and budget airline easyJet both losing 3%.

This means the FTSE 100 has lost more than £100bn of value since the start of this week, as City investors have been spooked by the surge in coronavirus infections around the world.

Newsflash: the coronavirus outbreak will hit its sales and profits at drinks giant Diageo this year.

Diageo, the company behind Guinness, Smirnoff, Johnnie Walker, Baileys and Talisker, has warned the City that Covid-19 will have an adverse impact on its operations this year.

Diageo estimates that the ongoing crisis will knock £225m to £325m off its organic net sales this year. That will wipe between £140m to £200m off organic operating profits, it reckons.

Diageo’s statement outlines how business has been hit hard in Greater China in recent weeks:

Bars and restaurants have largely been closed and there has been a substantial reduction in banqueting. As the majority of consumption is in the on-trade, we have seen significant disruption since the end of January which we expect to last at least into March.

This disruption has now spread across the region, it adds:

The outbreak in several other Asian countries, especially South Korea, Japan and Thailand, has led to events being postponed, a reduction in conferences and banquets, and a drop in tourism which have all impacted on-trade consumption.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The coronavirus selloff shows no signs of abating, as investors around the world are gripped with fears of a global pandemic -- and a major slowdown.

European stock markets are heading for fresh falls today, which will drive Britain’s stock market down to a one-year low.

The FTSE 100 is currently being called down 60 points at 6957, a drop of almost 1%. It has already shed 5% of its value this week, after two days of heavy selling.

The escalating virus crisis sparked another heavy day of losses on Wall Street last night, where the Dow fell by 879 points - on top of Monday’s 1,000 plunge.

Overnight, a World Health Organisation expert warned that countries outside China are “simply not ready” for a pandemic -- as new cases are reported in Iran, South Korea, Italy, Austria, and Croatia.

WHO’s Bruce Aylward warned:

“You have to be ready to manage this at a larger scale … and it has to be done fast.”

That warning helped to trigger another day of heavy losses in Asia-Pacific markets. Australia’s S&P/ASX 200 index has shed another 2.3%, on fears that its economy will take a big hit from the slowdown in China.

South Korea has shed another 1.5%, with China’s CSI 300 down 1.2%.

Our main coronavirus live blog has all the details:

Jasper Lawler of London Capital Group reports that investors are rethinking how well, or badly, the global economy will perform this year.

We’ve now had two seismic daily declines on global stock markets. Short term traders may well choose to grit their teeth for a short-covering rally but we’re getting the impression institutional investors are materially reassessing their outlook for stocks.

The Dow and S&P 500 have just notched up the worst 2-day decline since February 2018 with the Dow giving up over 1900 points in the process. The Nasdaq has closed in the red for the year. Alarmingly, it has been reported that Only 5 US states have the capacity to test for the coronavirus.

European shares look set for a lower open with the number of cases in China moving higher again. There are some stark instances of business being affected now - Royal Caribbean has cancelled 30 cruises in Southeast Asia. Nobody’s willing to ‘catch a falling knife’ with these kinds of headlines. Benchmarks in Europe look in bad shape.

The agenda

• 3pm: US home sales data for January
• 3.30pm: US oil inventory figures