Stock markets pause for breath after plummeting on coronavirus fears
Stock markets have steadied after Monday’s dramatic falls amid fears over the spread of coronavirus, but experts warned of further shares pain to come as the outbreak rages on.
The FTSE 100 Index opened with small gains on Tuesday before edging around 20 points lower as it pulled out of a nosedive that left it nursing the biggest fall for four years.
More than £62 billion was wiped off the value of Britain’s top share index in the previous session after news of the first major outbreak of coronavirus in Europe, with Italy suffering hundreds of cases.
Indices across Europe showed signs of stabilising as investors looked to pick up bargains after the heavy falls, thanks also to a cautious rise on the Hang Seng index in Hong Kong overnight.
The Dax in Germany and France’s Cac 40 were just over 20 points lower each within the first hour of trading on Tuesday, having both fallen 4% on Monday.
Russ Mould, investment director at AJ Bell, said: “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.”
But Michael Hewson, chief market analyst at CMC Markets, said it was likely that markets were only pausing for breath.
He said: “There is no question financial markets are coming round to the realisation that this particular crisis is likely to have a slightly longer shelf life than many thought was the case a couple of weeks ago.
“There appears little prospect that financial markets look likely to settle down in the short term, which means investors will have to get used to an extended period of uncertainty and volatility.”
Britain’s biggest airlines were some of the losers in Monday’s shares plunge as investors ran scared of the travel industry.
Investors also fled from oil, with Brent crude down more than 5%.
But oil prices were 0.2% as markets stabilised on Tuesday, while, among airlines, British Airways owner International Airlines Group was 1% higher after falling more than 9%.
Holiday giant TUI and low-cost carrier easyJet remained under pressure, down another 2% and 1% respectively after Monday’s tumble.