Global stock markets have suffered their biggest falls since the 2008 financial crisis and trading was temporarily suspended on Wall Street after an oil price crash rattled investors fearing a coronavirus-driven global recession.
Dealing in shares on the main US indices was frozen within minutes of the opening bell, as circuit breakers were triggered by a 7% fall on the S&P 500. Once trading resumed 15 minutes later, the Dow Jones Industrial Average completed a fall of more than 2,000 points for the first time ever – a fall of more than 7%.
The FTSE 100 index in London was down more than 6% by mid-afternoon, shedding more than £100bn as it fell through 6,000 points before recovering slightly. The UK’s blue-ship stock market index remains on track for its worst one-day fall since 2008, when the collapse of Lehman Brothers heralded the onset of the global financial crisis. Oil stocks are the biggest fallers, with BP down 18% and Shell tumbling 14%. On the FTSE 250, shares in Premier Oil plunged 53% and Tullow Oil fell 27%.
28 October 1929 The original Black Monday. The Dow plunged 13%, then a record, as the Great Wall Street Crash ended the bull market of the 1920s.
29 October 1929 The Dow plunged 12% amid a second day of panic selling, wiping out investors who had borrowed money to buy stocks.
19 October 1987 Wall Street’s worst day ever saw 22.6% wiped off the Dow, sparked by worries about the US economy and fuelled by new automatic trading programmes.
14 April 2000 The Nasdaq index plunged by 9% as the dotcom bubble burst, sending tech stocks down 25% in a single week.
17 September 2001 After 9/11, Wall Street remained closed until 17 September 2001, the longest shutdown since 1933. The Dow fell 7.1% or 685 points on that first trading day, with airlines and insurers leading the rout.and there were more steep losses in the days that followed. Among the biggest fallers were companies in the airline and insurance sectors.
15 July 2002 The FTSE 100 tumbled 5.4%, its worst daily loss during a poor year dominated by fears of war on Iraq, tensions in North Korea, and economic stagnation
10 October 2008 The collapse of Lehman Brothers in September 2008 triggered an autumn of wild plunges, with Britain’s FTSE 100 shedding 8.8% in a single session, its worst day after the 1987 crash.
22 September 2011 The FTSE 100 fell 4.6% as markets wobbled during the summer, hit by fears of a new global recession and the Greek debt crisis.
24 August 2015 The FTSE fell 4.7% or 289 points, wiping more than £70bn off the value of London-listed companies, amid a wider global sell-off, prompted by fears about the health of China’s economy.
9 March 2020 Fears of a global recession triggered by the coronavirus, and the launch of an oil price war, hit global markets. The FTSE 100 plunged 7.7% , pushing it into an official bear market.
Panic selling spread across Europe as the coronavirus epidemic deepened around the world. Fears over the world economy were exacerbated by the shock decision by Saudi Arabia over the weekend to ramp up oil production in an attempt to drive rivals such as Russia and the US out of the market.
Germany’s Dax, France’s Cac and Spain’s Ibex all tumbled more than 6%. The biggest sell-off was Italy, the country worst hit by Covid-19 in Europe, with the FTSE Mib index down nearly 10%.
The price of Brent crude oil plummeted as much as 30% to $31.14 (£23.80), its biggest decline since the start of the Gulf war in 1991, before recovering slightly to $36.90. Some experts expect it to fall further unless the Saudis and Russians return to the bargaining table. Analysts at S&P Global Platts say the Saudi price war could drive oil prices below $30 a barrel for the first time since the 2016 oil price crash.
Neil Wilson, the chief market analyst at the trading platform Markets.com, said: “This will be remembered as Black Monday. If you thought it couldn’t get any worse than the last fortnight, think again.”
Italy was plunged into chaos as government plans to quarantine more than 16 million people – more than a quarter of its population – were leaked to the media. The number of people infected by coronavirus worldwide has passed 110,000 and the death toll is heading towards 4,000.
As investors rushed to the safety of UK, US and German government bonds, yields on gilts turned negative for the first time. Two-, three-, four-, six- and seven-year gilts, as UK government bonds are known as, were negative. The 30-year Treasury yield fell below 1% for the first time. The Japanese yen and gold, also seen as safe-haven investments, soared. Italian bond yields jumped as investors dumped the country’s government debt.
Stock markets in Asia Pacific also recorded huge losses. With fears growing of a recession in Australia because of the virus, the Australian share market closed down 7.4%. The Nikkei in Japan fell more than 5%, while Hong Kong’s Hang Sen lost 3.9% and the Shanghai stock exchange dropped just over 3%.
The ratings agency Moody’s said on Monday that the risk of a global recession was rising, with the spread of the coronavirus sparking a simultaneous supply and demand shock throughout the world economy.
The Berenberg analyst Holger Schmieding said: “The world is facing a medical emergency that monetary and fiscal policy cannot fix. The situation will settle down once we have more clarity about the future course of the disease.
“Until then, we face serious downside risks. This is very different from the post-Lehman and the euro debt crisis, when monetary policy made the crucial difference.”
