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Covid-19: Stock markets plummet in worst week since 2008 financial crash

China has now recorded almost 80,000 cases of Covid-19.

Image: AAP/PA Images

STOCK MARKETS AROUND the world have fallen dramatically in the worst week since 2008′s financial crash amid investor fears over the coronavirus. 

As the virus spread from mainland China into the Middle East and now Europe, global stock exchanges have plummeted this week as the number of reported Covid-19 cases has risen. 

China has now recorded almost 80,000 cases of Covid-19. A total of 2,790 people have died, the majority in the Hubei province, where the virus originated. 

According to the latest figures from the European Centre for Disease Prevention and Control, 820 cases of Covid-19 have been reported in Europe where 14 people have already died from the virus.  

Global stock exchanges are where traders buy and sell company stocks and bonds and form an integral part of the market economy. If stock prices fall companies have less ability to grow and make profit. 

Asian stock markets plunged further today owing to virus fears, deepening a global rout after Wall Street endured its biggest one-day drop in nine years. The Dow Jones, the US stock market index , dropped by 4.4%.

Corporations like Coca-Cola, IBM, Microsoft and Apple are listed on the Dow Jones index, which measures each company’s stock performance. 

Indexes are used so investors can compare current prices with past prices to calculate market performance. 

Tokyo’s benchmark plummeted today by an unusually wide margin of 3.7%, and Seoul and Sydney dropped by more than 3%. Hong Kong and Shanghai fell over 2.5%.

Oil prices also slumped on expectations that industrial activity and demand might contract this week. 

A growing list of major companies, meanwhile, are issuing profit warnings and say factory shutdowns in China are disrupting supply chains. They say travel bans and other anti-disease measures also are hurting sales in China, a major consumer market.

Virus fears “have become full-blown across the globe as cases outside China climb”, Chang Wei Liang and Eugene Leow, of Singapore bank DBS, said in a report.

London’s main index was on course for its worst week since the depths of the financial crisis as markets opened down by 3.7% this morning.

The Guardian reports that analysts warned the outbreak could wreak economic havoc on a scale not seen since the 2008 financial crisis. 

Airline earnings have also been hit by “weaker demand” on Asian and European routes. 

Willie Walsh, the CEO of International Airlines Group – which owns British Airways and Aer Lingus – said it could lead to the closure of some “failing” airlines. 

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“We are well able to adjust to this situation because our business is in great shape. It’s the failing airlines who will be most affected by this… so without question, there will be more consolidation as a result,” he said.

British Airways owner IAG saw more than a 9.5% drop in its share price while Tui, the travel group, suffered a 6.2% fall.

Contains reporting from Press Association 

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