Stock markets sink again as WHO declares pandemic

There was little respite for European stock markets on Wednesday as they sank for a fifth consecutive day and ended the session at a 14-month low.

Initial gains made after the Bank of England’s emergency half-point interest rate cut were soon surrendered, while weakness on Wall Street also drove European equities down.

Near the end of European trading, the World Health Organisation officially declared the coronavirus outbreak a pandemic.

Dublin

The Iseq closed down 2.3 per cent amid the ongoing gloom. With airlines unable to sustain the rally in Tuesday’s session, Ryanair fell 3.6 per cent to €11.16, while cement-maker CRH, the largest stock on the index, declined 3.8 per cent to €26.48.

Dalata Hotel Group suffered more heavy losses, plummeting 9.6 per cent to €2.72, as it continued to bear the brunt of the anticipated impact of coronavirus on tourism and hospitality.

Insulation-maker Kingspan, which announced it will acquire the UK-based Colt Group, fell 4.5 per cent to €50.55, while food group while oil prices slumped again ended 4.8 per cent lower at €10.00.

Smurfit Kappa dropped 3.8 per cent to €26.80, but Kerry, which announced it was to invest in a new $125 million manufacturing plant in the US state of Georgia, limited its decline to 0.2 per cent, closing at €105.90.

Bank stocks recovered another portion of recent losses, with Bank of Ireland up 2.8 per cent at €2.74 and AIB nudging up 0.7 per cent to €1.60.

London

The FTSE 100 closed down 1.4 per cent while the mid-cap FTSE 250 finished 1.2 per cent lower, as the boost from the Bank of England’s unexpected rate cut failed to last. Investors also doubted that a £30 billion (€26.6 billion) package of measures in UK chancellor Rishi Sunak’s budget would help offset the economic damage of coronavirus.

The crash in oil prices continued to hound heavyweights BP and Royal Dutch Shell, which closed 3.6 per cent and 2.4 per cent lower respectively.

Travel and leisure was the worst performing sub-index, with British cinema operator Cineworld leading losses after analysts at RBC downgraded the stock on coronavirus risks.

Airline stocks also plummeted as travel disruptions from the virus saw investors selling en masse. G4S, one of the world’s largest private security firms, tumbled 22.6 per cent after posting an annual statutory loss.

Europe

The benchmark Stoxx 600 closed down 0.7 per cent, having turned red after US futures pointed to losses on Wall Street.

In Germany, the Dax slid 0.35 per cent, while the French Cac 40 was 0.6 per cent lower. The FTSE MIB in Italy, which has been severely affected by coronavirus, nudged up 0.3 per cent.

Bank stocks were among the few gainers after European Central Bank President Christine Lagarde was reported as having told EU leaders in a conference call on Tuesday night that policymakers were looking at all tools ahead of the meeting, particularly ones to provide “super-cheap” funding.

German minerals firm K&S jumped 14 per cent, topping the Stoxx 600 after it said it would sell its salt business in North and South America to slash debt and focus on potash products.

US

Wall Street opened lower and dropped further after the WHO declared a pandemic. All 11 groups in the S&P 500 sank at least 4.2 per cent. The index is lower for the 12th time in 15 sessions, and down 19 per cent from its all-time high.

Boeing plunged 13.5 per cent after it said it plans to draw down all of a $13.8 billion loan as the aircraft manufacturer’s woes continued to be compounded by coronavirus. The company had initially tapped about $7.5 billion of the debt, which it obtained last month to help it deal with its cash burn while 737 Max planes remain grounded.