World stock markets tumbled as virus cases spread, disruptions grow

Global stock markets tumbled on Friday as disruptions to business from the spreading coronavirus epidemic worsened, stoking fears of a prolonged economic slowdown.

European shares opened sharply lower, with travel stocks bearing the brunt. The pan-European STOXX 600 index was down 2.4% by 0856 GMT. [.EU]

Germany's DAX slid 2.4%, Britain's FTSE 100 fell 1.8% and France's CAC 40 fell 2.4%.

The MSCI All-Country World Index .MIWD00000PUS, which tracks shares across 47 countries, was down 0.72%.

After marking their worst weekly performance since the 2008 financial crisis, global stocks as measured by the index are up 1.7% this week, as sentiment recovered on the back of stimulus from policymakers to combat the economic fallout of the virus.

The U.S. Federal Reserve made an emergency interest rate cut of 50 basis points earlier this week. The Bank of Canada and the Reserve Bank of Australia also cut rates, with investors expecting other major central banks to soon follow suit.

Officials and companies in Britain, France, Italy and the United States are struggling to deal with a steady rise in virus infections that have in some cases triggered corporate defaults, office evacuations, and panic buying of daily necessities.

The outbreak spread across the United States on Thursday, surfacing in at least four new states.

“The interplay of virus containment fears and stimulus measures means that in the near term we expect market volatility to persist,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Yields on U.S. Treasuries fell to a record low and Treasury futures jumped as investors increased bets that the Fed will follow this week’s surprise rate cut with further easing.

The yield on benchmark 10-year Treasury notes US10YT=RR fell to a record low of 0.7650% on Friday.

Minneapolis Federal Reserve President Neel Kashkari said late on Thursday the Fed could cut rates further if needed.

Money markets are pricing in another 25 basis-point-cut from the current 1% to 1.25% range at the next Fed meeting on March 18-19 and a 50-basis-point cut by April.

Rapidly falling yields hammered the dollar, which fell to a six-month low versus the yen and close to a two-year trough against the Swiss franc.

Germany’s benchmark 10-year Bund yield fell to a six-month low within striking distance of last year’s record lows.

The flu-like virus emerged late last year in the central Chinese city of Wuhan and has since spread to more than 80 countries. It has claimed more than 3,000 lives, and though new infections have slowed in China there are concerns other countries are not prepared.

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