European stocks plunged on Friday as the number of coronavirus cases globally broached the 100,000 mark, raising the likelihood of a longer-term blow to economic growth and corporate earnings.
Across the continent, shares in airlines, investment firms, and entertainment companies saw broad declines, as the outbreak disrupts financial markets, the travel industry, and forces the cancellation of events.
Markets have also been spooked by record-low bond yields, as investors continue to sell off equities and move to safe-haven assets.
European banking stocks fell by 4.3%, hitting their lowest level since 2012.
The FTSE 100 (^FTSE) was down by around 3.6% in London. Germany’s DAX (^GDAXI) fell by around 3.5%, while France’s CAC 40 (^FCHI) was down by almost 4%, putting stocks in all three countries on track for their worst day of the week.
The yield on the benchmark 10-year US government bond fell to 0.8% on Friday, the lowest intraday level on record, while yields on UK government bonds have also hit an all-time low.
“The bond market is scaring the raccoons out of the air ducts like crazy right now. Investors seeking shelter and betting on aggressive policy cuts have driven the hottest bond rally in years, if not ever,” said Neil Wilson, the chief market analyst at Markets.com.
Because bonds — known as “gilts” in the UK and “treasuries” in the US — are guaranteed by governments, they are seen as having a much lower risk than investments in stocks and other commodities.
“As some investors realise the length and intensity of the crisis they are reviewing their assumptions on growth and earnings as investment banks pump one bearish report after another,” said Sebastian Galy, a senior macro strategist at Nordea Asset Management.
“Stories are replete with views of a permanent shock to global growth with intensity in China, South Korea, Japan, and Italy. Bond yields in many countries have reached historical lows as a symptom of this and many gear for another 50 basis point cut by the Fed at its next meeting on the 18th,” he said.
The declines in Europe followed a similarly weak trading session in Asia.
Futures are also pointing to a lower open for US stocks on Friday.