Coronavirus: Footsie slides below 5,000 as fresh sell-off triggers fears of 'brutal' recession

Markets have suffered a fresh drubbing with experts warning of continued volatility until the number of Covid-19 infections globally peaks.

Concerns over the impact of coronavirus on the companies' fortunes and the global economy triggered a fresh sell-off on the markets. Picture: DANIEL LEAL-OLIVAS/AFP

The sell-off, which has seen the FTSE-100 index plunge below 5,000 in early trading on Monday, comes as fears grow over a “brutal” though hopefully short-lived global recession as efforts by central banks to prop up economies and businesses fail to restore confidence amid the coronavirus crisis.

Within the first hour of trading in London, the benchmark FTSE-100 index had lost a further 7 per cent or more than 375 points to 4,990.

Adrian Lowcock, head of personal investing at investment platform Willis Owen, said: “Over the weekend central banks including the US [Federal Reserve] and the Bank of England agreed a co-ordinated response to the epidemic, promising a level of support not seen since the peak of the global financial crisis in 2008.

“However, markets remain rattled. Falls in Asia overnight have been followed by sharp sell-offs in the UK and across Europe.

“Until we see an end in sight for the virus and the number of infections globally peak, markets are going to be extremely volatile, and it’s likely going to get worse before it gets better.

“However, once the infection rate peaks and the world gets back to some semblance of normality, markets could snap back as fast as they fell.”

Ulas Akincilar, head of trading at the online trading platform, Infinox, noted: “So much for the Fed’s line in the sand. The tide is still going out on global equities as investors price in what’s now looking set to be a brutal recession.

“Goldman Sachs is now predicting zero growth for the US economy in the first quarter of 2020, and a contraction in the second quarter. The speed and scale of the crisis means this forecast, much like the Fed’s desperate intervention, is already looking over-optimistic.”

Nigel Green, the chief executive and founder of wealth management heavyweight deVere Group, said the recovery from a coronavirus-triggered recession would usher in a new era in which how people live, do business and invest will fundamentally change.

“Any way you look at it, it’s now almost certain that there will be a coronavirus-triggered recession as both global supply and demand are impacted,” he said.

“We can expect this recession to be deep but short. The slowdown will be temporary because it’s not caused by deep-rooted problems and imbalances in the economy, rather by a wholly unexpected shock that’s gripped the world.

“Every recession produces a new world. This one will too. A Covid-19 recession is likely to fundamentally shift how we live, do business and invest.”