Coronavirus: Big stock markets crash either side of Atlantic despite central bank action

  • Video report by ITV News Business and Economics Editor Joel Hills

It has been another extraordinary day.

Stock markets in Europe opened in a state of high anxiety, which gave way to panic.

Investors are in the dark. They don’t know how many people will fall ill, how long it will take for them to recover or when a coronavirus vaccine will be discovered.

An economic shock of unknowable scale is upon us and shares in companies are being sold-off

Manchester's Trafford Centre, owned by Intu, could be an unlikely casualty of Covid-19. Credit: AP

The FTSE closed down more than 10 per cent, the second largest fall in its history

This was not a flight to safety, it is an exodus. Financial markets are showing early signs of dysfunction.

Investors are hording the few assets they have faith in. They are sitting on US government debt in particular. This is causing stress.

In extremis, there’s the risk liquidity will dry up.

Coronavirus: Everything you need to know

Stock markets around the world are suffering amid the coronavirus. Credit: AP

Investment banks, high street banks, insurers and pension funds all have big exposure to the bond markets. They will struggle if the whole thing gums up.

Enter the Federal Reserve who, mid-afternoon, made a pledge to make trillions of dollars of short-term loans available. The scale was impressive but it failed to stop the rout.

Central banks around the world have tried this week to offer reassurance but the alarm seems widespread.

A stock market slump may feel like a remote and incomprehensible irrelevance but it has real life consequences.

Pension savers have seen their savings evaporate. The current situation makes it impossible for companies to raise money by issuing shares.

And the concern is that, as the virus spreads and restrictions are imposed, companies are starting to run out of money.

Coronavirus has signalled bad news for stock markets globally. Credit: AP

Today Intu, which owns a host of shopping centres around the UK, warned it may go bust.

Cineworld said in a worst-case scenario the coronavirus outbreak may it leave unable to pay its debts.

The Carnival group decided to suspend its Princess Cruises operations, 18 ships will be confined to port

Norwegian Air cancelled flight and routes and says it intends to layoff half of its 11,000 staff, it hope the move is temporary. The airline industry is in crisis and says it urgently needs government help.

This is, in short, and at risk of stating the bleedin’ obvious, a complete mess.