New York/Mumbai: As the coronavirus spread to 53 nations on Friday, it is panic stations in global markets with the Dow Jones Industrial Average plunging nearly 1,000 points for the third day this week – its largest single-day point loss in history.
As the virus wiped off $6 trillion off world stocks, alarm bells were ringing of a possible global recession.
European and Asian indexes too were in a free fall and the sombre mood was mirrored by the Dalal Street, which lost 1,448 points in a sell-off that saw none of its 30 constituent stocks withstanding the carnage. Investor wealth was wiped out by more than Rs 5 lakh crore in a day.
Stock markets, including Dalal Street, seem to be on track for the worst week since the 2008 financial crisis. Selling intensified in the US stocks after reports surfaced that California is monitoring 8,400 people for potential coronavirus infection.
The viral outbreak in China has already infected more than 83,000 people globally. More important, the Chinese economy has come to a standstill -- its factory shutdowns and quarantines disrupting the global supply chain.
Investors are responding by selling stocks, as well as commodities like oil, as they anticipate a slump. But it's not just Friday, the downward trend has impacted India’s super rich since the beginning of this year.
Mukesh Ambani has lost $5 billion, Ajim Premji $869 million and Adani $496 million in 2 months. As per Bloomberg's Billionaire index, Mukesh Ambani, the Chairman Reliance Industries, has lost over $5 billion of his wealth this year.
Initially, traders worldwide had been hopeful that the coronavirus outbreak -- which until last week had mainly affected mainland China - was being brought under control.
But now with new outbreaks raging from Italy, to Iran and South Korea, there are fears that it could turn into a pandemic which would derail global industry. The first case in sub-Saharan Africa too has been reported. Cases have now been reported on every continent on earth, except for Antarctica.
Anxiety intensified on Thursday when the United States reported its first virus case -- of someone who hadn't travelled abroad or been in contact with anyone who had. Iran, in turn, has confirmed 34 coronavirus deaths and Germany put 1,000 people in quarantine in its most populous state on Friday.
On Thursday, the S&P 500 fell 4.4% to 2,978.76. The index is down 12% from its all-time high a week ago, putting the market into what traders call a ‘correction’. Some analysts have said that it was long overdue in a record-setting bull market: in fact, what has been witnessed in just six days is 'the fastest correction since the Great Depression' in the 1930s.
The market's sharp drop this week partly reflects increasing fears among many economists that the US and global economies could take a bigger hit from the coronavirus than previously thought, weakening consumer confidence and depressing spending.
The World Health Organization has said that the coronavirus outbreak has reached a "decisive point" and has "pandemic potential" as the toll in China increased to 2,788 on Friday.
