Market turmoil persists as virus spreads

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Share markets in the US were sharply lower on Wednesday in another day of jittery trade, driven by fears about the economic impact of the coronavirus.

The Dow Jones was down nearly 5% at midday trade in New York, while the S&P 500 and Nasdaq fell more than 4%.

London’s FTSE 100 slid more than 1.5%, while other European markets saw more modest falls.

The falls come as countries rush to approve spending to shield economies from reduced activity due to the virus.

UK Chancellor Rishi Sunak has unveiled a £30bn package to fight the outbreak on the same day that the Bank of England delivered an emergency cut in interest rates.

In the US, the White House and Congress are trying to come to agreement on economic relief after President Donald Trump’s proposal of a tax cut for workers failed to garner widespread support.

Treasury Secretary Steven Mnuchin said on Wednesday that the administration plans to extend deadlines for tax payments, cover the cost of sick leave for staff forced to stay home and provide loan guarantees for affected industries, such as airlines.

“We are not only focused on the health issues, but the economic issues,” he said.

The continued spread of the virus, despite hopes of containment, has forced economists to repeatedly revise growth forecasts in recent weeks. On Wednesday, the World Health Organization formally declared the outbreak a pandemic.

On Wednesday, economists at IHS Markit said global growth was likely to slow to 1.7% this year, down from the 2.5% it forecast last month.

The firm warned that the outbreak was likely to push Europe, which was already experiencing low growth, into recession and reduce US growth to 1.8%.

The coronavirus was not the only thing on investors’ minds.

Markets have been slammed this week by a plunge in oil prices, after oil exporters said they would increase output rather than make coordinated cuts. On Wednesday, oil prices were down almost 3%.

And on the Dow, the biggest drag was US planemaker Boeing, which fell more than 10%.

The firm has been in crisis since the crashes of two of its 737 Max planes, which have since been grounded globally for about a year. On Wednesday, it reported 46 cancellations for the jet, which were not made up by new orders.

It is also reportedly freezing hiring and being forced to draw on a $13.8bn loan, in part because of the coronavirus.

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