(Reuters) - London’s FTSE 100 index crashed to levels not seen since the 2012 on Thursday after the European Central Bank’s stimulus package underwhelmed markets and added to alarm caused by a U.S. curb on European travellers.
U.S. President Donald Trump on Wednesday suspended travel from Europe to the United States for 30 days to limit the spread of the coronavirus.
Although the United Kingdom was spared from the travel restrictions, fears were widespread over its impact on the travel sector.
The ECB approved fresh stimulus measures on Thursday to help the bloc cope with the “major shock” of coronavirus but left interest rates on hold, which hit sentiment further.
“Despite policy stimulus comments by both the U.S. administration and other influential bodies such as the European Central Bank, investors marked shares down aggressively as fears that the current global disruption would inexorably spill over into a period of recession or at least suppressed economic growth,” said Chris Bailey, European strategist for Raymond James.
Symbolic of the extent of economic damage from the outbreak, cinema operator Cineworld CINE.L shed more than 24% as it said that in the worst-case scenario, the outbreak could cast doubt over its ability "to continue as a going concern."
The FTSE index has shed about 32% since its January peak, as the heavy blow from the pandemic rattled investors despite the Bank of England’s emergency 50 basis points interest rate cut and the UK government’s 30 billion-pound ($39 billion) stimulus plan.
Trump’s travel ban brought the longest ever bull run in U.S. stock market history to a screeching halt, pushing Wall Street’s main indexes into a bear market. [.N]
“Yes, we’re now back at a level in 2012. Every sector across the board - banking, consumer, travel, everything, the oil and gas sector, which is a big industry on the FTSE, has been hit extremely hard,” said David Madden, market analyst at CMC Markets.
“The sentiment is absolutely awful, to be honest.”
Shares of Carnival Plc CCL.L tumbled 17.7% after subsidiary Princess Cruises, the operator of two ocean liners quarantined because of numerous coronavirus cases, said it would suspend voyages of all its 18 ships for two months.
The suspension upends an industry already struggling with cancellations following the outbreak.
Reporting by Shivani Kumaresan and C Nivedita in Bengaluru; Additional reporting by Sruthi Shankar and Devik Jain; Editing by Toby Chopra
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