Shares around the world have plunged as investors fear the spread of the coronavirus will destroy economic growth with government action insufficient to arrest the decline.
The main UK index dropped more than 10% in its worst day since 1987.
In the US, the Dow and S&P 500 were also hit by their steepest daily falls since 1987.
The declines came despite actions by the Federal Reserve and European Central Bank to ease financial strains.
At the start of US trading, plummeting shares triggered an unusual automatic suspension in trading for the second time this week.
When trade resumed 15 minutes later, shares continued to fall, taking cues from the slide in European markets.
The S&P 500 fell 9.5% and the Nasdaq ended 9.4% lower, while losses on the UK’s FTSE 100 wiped some £160.4bn off the market. In France and Germany, indexes cratered more than 12%.
“Markets are at a breaking point,” said Neil Wilson, chief market analyst at Markets.com. “No one knows what a total economic shutdown, however temporary, looks like.”
The declines came after the US restricted travel from mainland Europe.
Losses on European indexes accelerated after the eurozone’s central bank failed to cut interest rates, although it did pledge fresh stimulus measures.
The New York branch of the Federal Reserve said it was pumping $1.5tr to ease strains in the debt markets, offering increased overnight loans to banks and expanding the kinds of assets it will buy to keep firms lending.
The announcement, which came after European markets had closed, briefly sent shares higher, but they dropped back by the end of the day.
Rate cuts by the US central bank last week and the Bank of England on Wednesday also did little to soothe investors.
“What we really need is some huge confidence that this isn’t going to cause the kind of stress and horrible loss of life [it has] in Italy everywhere else in the world,” said former Goldman Sachs chief economist Lord Jim O’Neill.
Stocks in Asia also saw big falls earlier, with Japan’s benchmark Nikkei 225 index closing 4.4% lower.
Panicked selling led to trading halts in Brazil, while not a single company in the FTSE 100 index gained on Thursday.
Travel companies saw some of the biggest falls, driven by US President Donald Trump’s 30-day ban on travellers from mainland Europe.
Shares in Delta Air Lines and United Airlines – among the most affected by the ban – dropped more than 20%. In the UK, airline group IAG was down more than 15% and Tui fell 17%.
Oil prices also fell, with Brent crude down more than 8% at about $33 a barrel.
On the floor of the New York Stock Exchange, tensions were high. Some traders were speculating the tumbles could trigger a second trading suspension – something that has never happened, not even during the financial crisis.
Since the start of the market turmoil, indexes in the US and elsewhere have fallen more than 20% from their recent highs – a threshold that is a red flag for a recession.
“It looks increasingly likely that the coming contraction will be deeper and more protracted than we were anticipating just a few days ago,” said Jay Bryson, acting chief economist at Wells Fargo. “The airline and hotel industries are in free fall, and there will be multiplier effects.”
Investors in the US are now watching the US government response.–BBC
