In European Equity Markets the pan-European Stoxx 600 closed down 4%, with oil and gas stocks plunging nearly 10% to lead losses as all sectors and major bourses slid deep into negative territory. Plane manufacturer Airbus fell 20% after Reuters reported that the U.S. is set to boost tariffs on its planes by 50% on Wednesday. At the top of the European benchmark, shares of cinema operator Cineworld jumped more than 150% after suffering a historic collapse over the past month to hit an all-time low on Tuesday.
In Currency Markets the British pound fell to its lowest levels in more than three decades on Wednesday, barring a flash crash in October 2016, as concerns about the economic impact of the coronavirus overshadowed any stimulus efforts by policymakers so far. Against the dollar, the pound plunged 2.5% to $1.1744, its lowest level since the October 2016 flash crash. Talk of an imminent London lockdown announcement, after the number of confirmed coronavirus cases in the United Kingdom jumped to 2,626, weighed on sentiment.
In Commodities Markets oil prices fell on Wednesday, with U.S. crude futures hitting an 18-year low and Brent a 16-year low as Goldman Sachs said lockdowns to counter the coronavirus pandemic raised prospect of the steepest ever annual fall in oil demand. With governments worldwide urging residents to limit gatherings and isolate themselves, global oil demand by the end of March could fall as much as 8 to 9 million barrels per day, Goldman Sachs said. Brent crude was trading down 9.3%, at $26.05 a barrel.
In US Equity Markets the Dow fell more than 7% to a three-year low on Wednesday, moving into negative territory compared to levels when President Donald Trump took office and marking the latest landmark in Wall Street’s most dramatic selloff in decades. In a bright spot was Walmart Inc, up 5.9%, after Credit Suisse said the retailer would benefit from a structural change in consumer behaviour towards online shopping in the wake of the COVID-19 situation.
In Bond Markets Italian bonds rallied sharply on Wednesday as the market anticipated crisis purchases by the ECB, while German 10-year bonds were set for their worst day since the financial crisis as investors dumped highly liquid debt. Italy’s 10-year bond yield fell to as low as 2.18% after swinging above 3% earlier in the session for the first time since February 2019. It was last down 9 basis points at 2.29%. Germany’s 10-year benchmark rose 20 basis points to -0.23% in its worst daily performance since September 2008.