Global stock markets plunge in their worst week since the 2008 financial crisis on fears of coronavirus impact

As the global toll of the coronavirus rises, stock markets around the world plunged to their worst week since the 2008 financial crisis, wiping out over $ 6 trillion in value.

“This is the first point in the market cycle where fear has taken over from greed,” said Craig Jerusalim, the senior Canadian equities portfolio manager at CIBC Capital Markets.

Even some of the professional traders used to the daily ups and downs of stock markets were reeling by the end of the week, Jerusalim admitted.

“There are a few people looking a little glassy-eyed.”

In Toronto, the S&P/TSX composite index closed down the week at 16,263.05 points, a drop of 454.39 points on the day, and roughly eight per cent for the week. In New York, the Dow Jones Industrial Average plunged 12 per cent for the week, the S&P 500 lost 11.5 per cent, and the NASDAQ fell 10 per cent.

Since Feb. 19, U.S. stocks have lost nearly $ 3.6 trillion (U.S.) in value. This week alone, Microsoft and Apple, the two most valuable companies in the S&P 500, lost a combined $ 300 billion (U.S.).

In a sign of the severity of the concern about the possible economic blow from coronavirus, the price of oil sank 16 per cent.

The head of the World Health Organization announced that the risk of the virus spreading worldwide was “very high,” citing the “continued increase in the number of cases and the number of affected countries.”

The list of countries touched by the illness climbed to nearly 60 as Mexico, Belarus, Lithuania, New Zealand, Nigeria, Azerbaijan, Iceland and the Netherlands reported their first cases. More than 83,000 people worldwide have contracted the illness, with deaths topping 2,800.

Thursday, as the markets plunged again, trading on the TSX was halted over an hour early for the day because of technical issues, adding to the sense of doom and gloom.

Veteran market strategist David Prince said stock markets were due for a correction, but that most investors weren’t expecting something this big, this sudden.

“People who bought into the market in October are getting a rude awakening,” said Prince, president and founder of Harbinger Capital Markets Research, a Toronto-based independent research firm.

Many investment professionals have been shocked this week, Prince suggested. Particularly, he added, younger traders working with computerized algorithm-based trading.

“There are people working in the markets who’ve never seen a crash like this before. If you look at the age of the people working in the algo rooms, they just haven’t seen something like this. We’ve been on an 11-year bull run,” said Prince.

Those algorithms, cautioned Prince, can make stock market swings even more pronounced than they’d otherwise be.

“Things are exacerbated by the algo trading at a time like this,” Prince said.

The combined fortunes of the world’s 500 richest people fell by $ 444 billion (U.S.) as the coronavirus continued to spread. The drubbing more than erased the $ 78 billion in gains that the 500 wealthiest people had amassed since the start of the year through last week, according to the Bloomberg Billionaires Index.

The world’s three richest people — Amazon.com Inc.’s Jeff Bezos, Microsoft Corp. co-founder Bill Gates and LVMH Chairman Bernard Arnault — incurred the biggest losses; their combined wealth dropped about $ 30 billion.

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Elon Musk, the world’s 25th-richest person, rang up the fourth-largest weekly loss — $ 9 billion — as shares of his Tesla Inc. slid after a steep climb to start the year. He’s still up $ 8.8 billion in 2020 and has a net worth of $ 36.3 billion.

Friday afternoon, the chairman of the U.S. Federal Reserve attempted to calm fears the world’s largest economy would be hammered by the coronavirus. The statement from Jerome Powell came just days after federal health officials warned the virus will almost certainly spread across the U.S., and told businesses, schools and hospitals they needed to prepare.

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy,” said Jerome Powell in an emailed statement.

Powell’s words led to a late-day rally for U.S. stocks as investors took it as a signal the Fed would cut interest rates in an attempt to boost the American economy.

With files from Star wires

Josh Rubin

TORONTO STAR