Deadly coronavirus wipes £125BILLION off the stock markets
THE FTSE 100 closed 7.7 per cent down this afternoon after an oil price war launched by Saudi Arabia overnight wiped 30 per cent off the price of a barrel of oil.
It was at a three-year low at the start of a trading day, down almost 8 per cent, with investors also alarmed about the economic fallout of the coronavirus outbreak.
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As of 5.00pm today, it recovered slightly to close 496.78 points down, or 7.69 per cent.
Around was £125billion off the stock markes — slashing the pensions and savings of millions on what has been dubbed Black Death Monday.
Shares in the FTSE 100 index of Britain’s biggest companies plummeted around 500 points.
The when the US markets opened today, causing trading to halt for 15minutes for the first time since 2008.
But earlier, oil majors BP Plc and Royal Dutch Shell Plc tumbled more than 20 per cent, dragging the wider oil and gas index down 22 per cent.
Last night, Saudi Arabia slashed its selling price following Russia's refusal to cut oil supply, causing crude oil prices to take their biggest one-day hit since the 1991 Gulf War.
Talks between the two countries in Vienna collapsed on Friday, with Saudi Crown Prince Mohammed Bin Salman announcing huge price cuts to Saudi crude.
Saudi Arabia also plans to increase production above the 10 million barrel per day mark.
This has triggered a price war aimed at Russia, with brent crude dropping to just $31.02 a barrel at its lowest.
It means that petrol companies and supermarkets in the UK will come under pressure to slash prices to reflect wholesale costs.
Fuel price expert Luke Bodset from the AA reckons it could knock 7p to 8p off a litre of fuel at the pump, or £3.85 per tank.
"The spat between oil producers echoes the oil price crash in 2015, when £1-a-litre fuel returned to UK petrol stations.
"There is still a long way to go and the chances of another major collapse in forecourt prices will depend on how long the oil price plunge continues and how quickly UK retailers take to pass on savings," said Luke.
Markets in Australia had their worst day since the financial crash of 2008, with the ASX200 tumbled 7.3 per cent to 5,760.6 as it lost $140 billion after falling 3 percent on Friday and has now fallen 19.6 per cent since February 20.
It comes after the FTSE 100 lost £59billion on Friday, following a 13 per cent drop the week before.
The outbreak of deadly coronavirus has also affected the demand for oil, with Flybe airline even calling in administrators as passengers ditch flying in favour of staying at home.
The drop in stock market values over the past two weeks suggest fears among investment that measures to contain the virus will hit the economy hard, damaging global growth.
It fell just short of the worst drop suffered during the financial crisis, when it fell by 10.2 per cent in a day on October 10 2008.
If it takes another dive today, it could be the steepest fall since the "Black Monday" crash of October 1987 when FTSE 100 fell 11 per cent and then 12 per cent on consecutive days.
The Dow Jones suffered it's worst ever percentage fall, which was so large that Wall Street computers crashed.
As of today, March 9, the number of confirmed cases of COVID-19 around the world rose to 110,000.
Plans to quarantine 16million people in the north of Italy were leaked yesterday, while many other countries are also preparing to close down factories and schools if the outbreak gets any worse.
Britain has so far reported three deaths and 278 cases of the new coronavirus.
The country's biggest retailer, Tesco, has restricted bulk buying of products such as anti-bacterial gels and wipes, dried pasta and long-life milk.
Ayush Ansal, chief investment officer at Crimson Black Capital, said that the crash shows "pure hysteria" from investors.
"Any positive news around the coronavirus is being ignored outright, while negative developments are being catastrophised.
"Markets will always be irrational but Monday morning saw the end of reason."
Nigel Frith, a senior market analyst at added: "The toxic combination of supply shock and demand shock has the potential to push the global economy into a recession.
"The longer the panic continues, the less chance of a V-shaped recovery and the higher the probability of coronavirus setting off the next global recession."
Prime Minister Boris Johnson is preparing to chair an emergency meeting at which more stringent measures to tackle the outbreak will be considered.
"The number of coronavirus cases continues to rise in the UK and around the world," Johnson said. "We are well prepared and will continue to make decisions to protect the public based on the latest scientific advice."
Medical experts are today expected to recommend the government move into its second "delay" phase in a desperate attempt to stop the killer virus.
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Last week, supermarkets revealed plans to limit the amount of food customers can buy and will work with suppliers to cut back on what's on offer.
The focus will be on providing staple products, like bread and milk, rather than variety.
But by Friday, retailers warned that they wouldn't be able to cope with deliveries for people self-isolating against the coronavirus.