Global stocks plunge, set for worst week since financial crisis

London: Global stocks slumped on Friday, on course for their biggest weekly decline since the financial crisis in 2008, on investor fears that the rapid spread of the coronavirus outside China could trigger a global recession.

Crude oil prices slipped lower as well and analysts said that central banks, especially the US Federal Reserve, might have to shift into crisis-resolution mode once again with urgent interest rate cuts.

James Bullard, head of the St. Louis Fed, warned Friday that emergency rate cuts were "not the baseline at this time" for the central bank´s policymakers.

"Beyond helping to alleviate the current stock market collapse, there is little any central bank could do to alleviate the potential repercussions of a global pandemic," noted Joshua Mahony, senior market analyst at IG.

Frankfurt headed the losses in Europe, shedding more than five percent at one point in morning deals.

Leading European stock markets have tumbled around 12 percent in just one week, while London´s FTSE 100 is back at levels seen in late 2018.

In New York, the Dow Jones index was 3.0 percent lower in initial trades, while the broader S&P 500 was off by 3.1 percent.

"Stock markets are well on their way to their worst week since the global financial crisis," said Craig Erlam, senior market analyst at Oanda trading group.

Stock markets in Shanghai, Sydney and Tokyo all closed down 3.0 percent, while Jakarta shed more than four percent.

The VIX "fear" index -- which measures market volatility -- is now at its highest level since the European debt crisis erupted in 2011.

"The panic mode is full on," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "The coronavirus outbreak has certainly hit businesses, and it might have a longer-than-expected negative impact on company earnings and global growth," she added.

Elsewhere Friday, the Japanese yen continue to benefit from its status as a haven investment in times of economic unrest, making solid gains against the dollar.

Concern that global crude demand will crash meanwhile sent oil prices down again, by almost 3.0 percent for Brent crude in London and by more than 4.0 percent for WTI crude.

"Another day, another sell-off," remarked analyst Stephen Brennock at energy consultancy PVM Associates.

"Risk assets took a significant step lower... as market players continued to squirm with unease over the growing coronavirus crisis."

Investors kept an eye out for interventions by central banks, particularly the US Federal Reserve, in the hope they would unveil monetary easing measures, and governments also faced pressure to provide support.