Friday 7 February 2020 3:48 pm

Global stocks fall as coronavirus fears grip investors

Global stock markets have fallen as fears resurface about the impact of coronavirus on the global economy.

China’s central bank warned last night that its economy will be hit by the outbreak, and Japan reported a jump in the number of cases on board a cruise liner off of Tokyo.

Read more: China tells Trump ‘no effort spared’ on fighting coronavirus after doctor’s death

US markets opened lower despite a stronger-than-expected jobs report. The S&P 500 was 0.3 per cent lower by 3.30pm, while the Dow Jones had slipped 0.6 per cent.

The FTSE 100 was 0.7 per cent lower. France’s CAC 40 was down 0.4 per cent and Germany’s Dax had dropped 0.7 per cent.

Coronavirus has now killed more than 630 people, while more than 31,000 have been infected, the vast majority in China.

China warns on growth

Overnight, a vice governor of China’s central bank said the economy would be disrupted in the first quarter of the year.

Vice governor Pan Gongsheng told a news briefing that the People’s Bank of China is preparing to release reserves to offset the pressure, and will maintain ample liquidity and lower various interest rates.

China was shaken on Friday by the death of a doctor who issued an early warnings about the coronavirus outbreak. Li Wenliang, a 34-year-old ophthalmologist at a hospital in Wuhan, was censured when he spoke publicly about the virus in the early days of the epidemic.

China’s Shanghai composite index finished 0.3 per cent higher after the reassurances that the central bank would inject stimulus.

Read more: Coronavirus cruise ship counts 40 more cases

Japan’s Nikkei fell 0.2 per cent, however, while Hong Kong’s Hang Seng slipped 0.4 per cent.

Japan revealed overnight that 41 more people trapped on board a cruise ship have contracted coronavirus, adding to the stream of stories shaking market confidence.

Economic worries spread

Neil Wilson of trading platform said traders realised the “placebo” of Chinese stimulus “can only mask symptoms for so long – real economic damage and supply chain havoc is coming”.

Credit rating agency S&P today cut its Chinese 2020 growth forecast to five per cent, down from 5.7 per cent, blaming coronavirus for the fall.

Burberry became the latest company to warn that coronavirus will dent its profit in the first quarter as luxury demand from China drops.

Just over a third of Burberry’s mainland China stores are closed, with others opening for fewer hours.

US stocks fell despite a booming January jobs report. The world’s largest economy added 225,000 jobs in January, non-farm payrolls data showed today, well above the 160,000 predicted by economists.

Read more: Burberry says coronavirus has had ‘more significant impact on sales than Hong Kong protests’

Yet the data could not clear the coronavirus gloom. “At the end of a week defined by a coronavirus rebound, the markets stumbled, uniformly retreating from yesterday’s highs,” said Connor Campbell, an analyst at trading platform Spreadex.

“Though there is clearly an appetite to keep pushing the Western indices higher, at the same time the coronavirus outbreak is far from dealt with.”