With the Dow Jones suffering its greatest ever single session fall overnight, Thursday’s freefalling momentum carried over into Friday morning, leading to a gory start for Europe and pushing the market towards its worst week since the financial crisis.
As the coronavirus inches closer to pandemic levels – Nigeria, Lithuania and New Zealand became the latest nations to report their first cases – and IAG and easyJet only confirming what investors had already suspected with their morning statements, there was nothing to staunch the loss of blood.
Down another 200 points, the FTSE sank below 6600 for the first time since the final days of 2018. A 3.9% decline for the DAX dragged it under 11900, while the CAC’s 3.4% slide left it barely holding on above 5300 – that’s 6-month lows for both indices.
Currently the US open isn’t likely to provide any comfort either. The Dow Jones is facing a 500 point plunge when the bell rings on Wall Street, taking it below 25250 – more than 4000 points off of last week’s all-time highs.
Any market-rescuing positive headlines regarding the outbreak itself seem a way off. So the question is, how low is low enough for equities to start to look appealing once again? Similarly, what is the threshold for bad news at the moment – as in, would the declaration of a pandemic by the World Health Organisation spark even greater losses, or has that been priced in already?
If that wasn’t enough, from March onwards each piece of data is going to more accurately reflect the economic impact of the coronavirus. If anything that might be where a tourniquet is found, if said figures can outperform rock bottom expectations.