Coronavirus fears push oil and shares sharply lower

The price of oil slumped and European share prices were hammered yesterday as fears over the spread of the coronavirus quickened.

As investors worried about the effects of travel bans on factory production and tourism and travel around the world, the IMF said it was still too early say what the effects the virus will have on world economic growth.

The coronavirus fears “have come back with a vengeance”, said Joshua Mahony, senior market analyst at online broker IG.

“With the virus now impacting over 8,000 people globally, we are seeing precious few signs that it will let up in the coming days. Meanwhile, despite the detrimental impact this health crisis will have upon the Chinese economy, Donald Trump remains unwilling to ease the burden of tariffs which serve to heighten the effect,” he said.

European stock indices fell around 1% and the price of Brent crude oil slumped by $2 to $57.84 a barrel.

The shares of long-haul airlines fell again: British-Airways-owner IAG (which also owns Aer Lingus and Vueling) fell 3.3% and Lufthansa fell 1%.

The Ftse-100 in London fell by 1.3% as sterling rose after the Bank of England resisted cutting interest rates.

The IMF said it is closely monitoring China’s corona virus outbreak, but it is too soon to quantify the potential economic impact there of the virus, which is halting tourism and commerce throughout the country.

IMF spokesman Gerry Rice told a regular news briefing that the direct impact on consumer and business demand had been most severe in Hubei Province, the outbreak’s epicentre, and the extent of the impact depends on how quickly the virus subsides.

Mr Rice added that China has enough fiscal space to support its economy though the crisis if necessary and ensure that households and businesses have access to credit.

“We’ve seen the direct impacts, mostly on demand as people have stayed home in China and what is usually a busy retail and tourism season has essentially come to a halt,” he said.

“At the same time, on the supply side, there have been production stoppages, transport delays and frictions and workers staying home,” he said.

Mr Rice said the outbreak was having an indirect impact on market confidence and business uncertainty.