Stock markets turn red as investors run scared at coronavirus: Footsie plunges

The London stock market suffered heavy losses in morning trading on Monday amid worries of a much wider and more protracted coronavirus outbreak.

Concerns over coronavirus turning into a pandemic saw the FTSE 100 index in London fall by more than 3 per cent in Monday morning trade. Picture: DANIEL LEAL-OLIVAS/AFP

Shortly before lunchtime the benchmark FTSE 100 index had fallen back to its lowest point since December, marking its fastest fall in nearly five months.

The index was down by some 259 points or 3.5 per cent at 7,144.63. The FTSE 250 had fallen by 3.1 per cent.

Coronavirus fears gripped Europe over the weekend after Italy confirmed at least 152 cases. It marks the biggest outbreak of the potentially fatal virus outside China and caused Italian authorities to scramble to contain the spread.

Investors made a beeline for safer areas with gold, for example, touching a seven-year high.

Adam Vettese, an analyst at multi-asset investment platform eToro, said: "Investors are now waking up to the fact that the Coronavirus could become a global pandemic. The ‘out of sight out of mind’ approach is now clearly no longer an option.

"The most worrying thing about the outbreak is that we have no idea how long it will last. That causes huge problems for firms that operate cross borders, such as airlines, or who rely heavily on global supply chains, such as manufacturers and healthcare companies.

"Unless governments can get a grip on the outbreak – and fast – it could be the most disruptive thing to hit markets in many years. That will almost certainly see investors nursing big losses."

Mihir Kapadia, the chief executive of Sun Global Investments, noted: "Global markets have started the week in poor form as more cases of the coronavirus are being reported across the world, which has led to more fears about the prospects for global growth and global trade.

"Across the pond, the Dow Jones Industrial Average futures is expected to plunge 700 points at market open later today.

"It appears that despite measures being taken by China and other nations, the overwhelming fear amongst markets is that the virus is still spreading, and with no concrete solutions in place to contain it, looks set to get worse as the week progresses.

"As a result, we could expect safe havens to continue their rise with gold, which has reached seven-year highs, likely to remain higher for the rest of the month. The dollar and US treasury bonds are also higher. Stocks will remain under pressure until the outbreak peaks."