13/3/2020 (44) US stocks fall 10% in worst day since 1987 crash | Financial Times

Markets Briefing Coronavirus

US stocks fall 10% in worst day since 1987 crash
Wall Street’s late sell-off came on top of Europe’s worst-ever single day performance

A trader on the floor of the New York Stock Exchange on Tuesday © Reuters

Adam Samson and Philip Georgiadis in London, Hudson Lockett in Hong Kong, Leo Lewis in
Tokyo and Colby Smith in New York 12 HOURS AGO

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13/3/2020 (44) US stocks fall 10% in worst day since 1987 crash | Financial Times

US stocks fell almost 10 per cent in their worst day since the 1987 crash despite
emergency actions by the Federal Reserve and the European Central Bank to mute the
financial and economic damage from the coronavirus.

Markets responded violently on Thursday to Donald Trump’s ban on Europeans

travelling to the US, announced the previous night in a White House address intended
to calm anxiety over the pandemic.

“This was the most expensive speech in history,” said Luca Paolini, chief strategist at
Pictet Asset Management. “Investors are voting with their feet, and I can’t blame
them.”

A further leg down in the final minutes on Wall Street left the S&P 500 off 9.5 per cent.
European equities had already shed a tenth of their value. London’s FTSE 100 fell 11
per cent. Thursday’s action extended the S&P 500’s losses to 26.7 per cent from its high
less than a month ago.

The Fed promised midway through the trading day that it would inject trillions of
dollars into the short-term funding markets — the third time in four days that it has
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13/3/2020 (44) US stocks fall 10% in worst day since 1987 crash | Financial Times
dollars into the short term funding markets
announced new lending — after analysts and investors said US government bond
trading had begun to seize up in the market volatility.
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the third time in four days that it has
The falls in Europe accelerated after the
European Central Bank left interest rates on
hold. The ECB declined to join the Fed and the
Bank of England in rate cuts and although it
announced a package of other measures,
investors had expected a reduction of the
banks’s main rate.
The week’s intense rout suggested investors
were bracing themselves for a worst-case
scenario, including a global recession, the
lockdown of large urban centres and a severe
credit crunch, said Masanari Takada, strategist
at Nomura. “The market has been jolted to the
point of breaking,” he added.
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13/3/2020 (44) US stocks fall 10% in worst day since 1987 crash | Financial Times

Travel and leisure stocks came under acute pressure. The cruise ship operator Carnival
lost nearly a third of its value, while United Airlines fell 25 per cent and British Airways
owner IAG declined 11 per cent.

Giant banks were also hard hit. Morgan Stanley, Citigroup and Wells Fargo all lost
around 15 per cent of their value.

The corporate fallout of the viral outbreak has deepened. UK companies including
WHSmith, Go-Ahead and Travelex warned investors about the impact of the pandemic,
while Cineworld, the world’s second-biggest cinema chain, warned that, in a worst-case
scenario, it would be unable to pay its debts, calling into question its ability to continue
trading.

Alicia Levine, chief market strategist for BNY Mellon Investment Management, warned
that the credit market could face a further shock if investment grade companies are re-

rated as junk, forcing large investors like pensions to sell their bonds. “This will create
forced selling, exacerbating the impact to the economy.”
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13/3/2020 (44) US stocks fall 10% in worst day since 1987 crash | Financial Times
o ced se g, e ace bat g t e pact to t e eco o y.

Oil prices, which crashed at the start of this week, fell on the expectation the US travel
ban would cause more pain for the travel industry. The international benchmark Brent
crude was down 7.2 per cent at $33.22 a barrel.

Read more about the impact of coronavirus

• The latest figures as the outbreak spreads
• How countries around the world are battling coronavirus
• How dangerous is the coronavirus and how does it spread?

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Additional reporting by Richard Henderson in New York and Myles McCormick in

London

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