European shares fell again on Thursday, with travel stocks taking the biggest knock, as a jump in new coronavirus cases outside of China deepened fears of a pandemic that could dent global growth. FTSE 100 has slumped by another 2%.
Multiple blue-chip companies issued profit warnings, with Standard Chartered (STAN.L) tumbling 3.4% after the Asia-focused bank said that a key earnings target would take longer to meet as the epidemic adds to headwinds in its main markets of China and Hong Kong.
The world’s largest beer maker, Anheuser-Busch InBev (ABI.BR), dropped 5.6% after forecasting muted growth in 2020 due in part to the outbreak.
Governments ramped up measures to battle a looming global pandemic as the number of infections outside China for the first time surpassed those within the country.
The pan-regional STOXX 600 index fell 2.2% by 0817 GMT, bracing for its worst week since January 2016 when fears about a slowing Chinese economy and a rout in oil prices sent global markets in a tailspin.
Travel & leisure stocks .SXTP slumped 3.3%, its sixth straight session of losses, as airlines and hotel groups dropped on concerns over demand.
Weak earnings reports also dampened the mood. Advertising major WPP (WPP.L) slid 13.6% after saying it would target flat organic growth and profit margin in 2020. Shares in rival Publicis Groupe SA (PUBP.PA) fell 3.3%.
The coronavirus will force the IMF to tear up its growth forecasts at its Spring Meeting in April, predicts Neil MacKinnon, global macro strategist at VTB Capital:
There is no respite for financial markets as the coronavirus spreads outside China. The reality is that the IMF is going to have to rewrite its projections when they are next due in April.
While the Fund is not known for ever predicting a recession, and its projections tend to be near consensus thinking, it cannot be ruled out that global GDP growth returns to 2.0% – especially given the EM and Asian economies are at the forefront of supply chain disruptions and export declines.
The IMF had predicted global growth of 3.5% this year, up from 3.2% in 2019. That now looks highly unlikely, given the disruption in China.