Global stock markets tank on virus woe

Grim warnings over economic impact, US halting funding for WHO worries investors

LONDON: Asian and European stocks sank on Wednesday as the coronavirus infects the global economic outlook, while oil prices dived as OPEC-led output cuts were deemed insufficient to soak up a vast supply glut.

Sentiment turned sour on Wednesday on grim warnings over the economic impact of the coronavirus, which was first reported in China and has so far killed more than 125,000 people and infected almost two million globally.

Investors also fretted on news that US President Donald Trump had frozen US funding for the World Health Organization (WHO) over its handling of the crisis, particularly with regard to China.

Top stock markets across Europe each shed more than 2%, as collapsing oil prices sent the energy sector tumbling.

The dollar meanwhile clawed back some ground versus rival currencies, having been slammed so far this week by recent US Federal Reserve virus stimulus cash.

Asian equities sank as investors fretted over the current uncertain climate, while energy companies there also took a hammering.

"The post-Easter bounce in markets has hit the rails somewhat," said London Capital Group analyst Jasper Lawler.

"The mood has darkened since the IMF's doom-laden global recession prediction and Donald Trump's decision to cut WHO funding."

Wall Street stocks had jumped on Tuesday on signs that new Covid-19 cases had fallen in some of the country's biggest hotspots including New York.

However, the Washington-based International Monetary Fund forecast the global economy would shrink 3% this year and the US economy, the world's biggest, is set to contract by 5.9%.

The IMF said it would be the worst global downturn since the Great Depression of the 1930s.

"This week we got some dire predictions of the damage the current global pandemic is likely to do to the global economy," said CMC Markets analyst Michael Hewson.

"Tuesday’s assessment by the IMF of the pandemic impact was an eye-watering assessment of the effect recent lockdowns are likely to have on global economic activity."