The FTSE 100 fell below 7,100 points for the first time since October last year as fears of a coronavirus pandemic continued to weigh down stocks a day after global markets plunged.
After starting the day with a marginal rise, the FTSE 100 finished the day nearly two per cent lower at 7,017 points.
Germany’s Dax sank 1.78 per cent and French stock market Cac dropped 1.87 per cent.
Among the biggest fallers on the FTSE 100 is engineering consultancy Ricardo, down nearly nine per cent, after warning the virus will have a material effect on its annual profit.
Carnival slipped a further 5.92 per cent after plunging nearly seven per cent yesterday. The travel company is particularly exposed to the panic over the coronavirus with shares down more than 10 per cent this month.
“What was largely a Chinese issue to resolve has soon become an international problem, with European eyes transfixed on Italian efforts to curb the spread of the virus,” trading platform IG’s senior market analyst Joshua Mahony said.
“Fears over a potential coronavirus contagion throughout Europe is likely to provide substantial risk-off sentiment for days and weeks to come, with significant pressure on the Italians to stop this outbreak from spreading throughout the continent.”
Italy is still hunting for the so-called patient zero who may be responsible for a huge rise in coronavirus cases over the weekend. Italy counted three cases on Friday but after further cases, including one outside the quarantined region, the number has risen to above 280.
“There are huge concerns over the possibility of this virus to freely pass through the largely non-existent borders of mainland Europe,” Mahony added.
“The sharp hit to Chinese tourist numbers provides a template for any potential pan-European crisis should this Italian outbreak spread.”
Airline stocks fall again on coronavirus concerns
UK airline stocks suffered their second day of losses to drag the FTSE 100 lower. British Airways owner IAG fell two per cent as it extended its China flight ban until after Easter. And Ryanair lost 1.4 per cent of its value, with tour operator Tui down 2.6 per cent.
Italy also reported its first case in the south of the country today, after putting towns in northern Italy into lockdown.
Meanwhile the UK put out a warning to Brits returning from northern Italy that they must self-isolate for 14 days if they are experiencing coronavirus symptoms.
Health secretary Matt Hancock told the BBC: “Those who have been to northern Italy – north of Pisa – if they have flu-like symptoms should self-isolate.
“If people have been to the affected areas that the Italian government have quarantined then they should self-isolate whether or not they have symptoms.”
FTSE 100: Stock bloodbath continues
CMC Markets analyst David Madden said coronavirus fears quickly reversed this morning’s rebound of stocks after yesterday’s “bloodbath”.
“The brutal losses endured yesterday coaxed a few buyers out of the woodwork, but given that equity benchmarks are back in the red suggests that sentiment is still sour,” he said.
“The coronavirus crisis in Italy remains at the forefront of traders’ minds. Dealers are fearful the health emergency will spread within Italy, and beyond its borders. Investment sentiment is fragile as there is the possibility of major disruption across Europe, so traders aren’t taking any chances.
On Monday the FTSE 100 plunged as low as 3.7 per cent before closing down 3.3 per cent. It was the index’s worst performance since January 2016 when the index closed 3.46 per cent lower. The index had been gripped by panic selling after China recorded its slowest rate of economic growth in 25 years.
The large spike in coronavirus cases in Italy shook investors yesterday on concerns that the virus could spread deeper into Europe and cause economic disruption.
The rapid developments in the outbreak of the virus outside of China prompted a sell-off in the FTSE 100 and other global markets.
The Dow Jones plunged over 1,000 points, nearly 3.56 per cent, yesterday while Nasdaq dropped nearly 3.71 per cent.
Among the biggest fallers on the FTSE 100 were London-listed airlines Easyjet and British Airways owner IAG, down 16.19 per cent and 9.15 per cent respectively.
France’s Cac index and Germany’s Dax are up marginally, 0.1 per cent at 9am.
Russ Mould, investment director at AJ Bell, said: “Markets have started to recover after yesterday’s brutal bloodbath. While stocks still have a long way to go to make up for Monday’s losses, it is encouraging to see share prices starting to move up.”
“It would suggest there are plenty of investors confident enough to go shopping for bargains rather than widespread fear.”