Global share prices headed for the worst week since the darkest days of the world financial crisis in 2008 as investors braced for the coronavirus to become a pandemic and rapidly spread around the world.
Hopes the epidemic that started in China would be over in a few months and economic activity would return to normal have been shattered as new infections reported around the world now surpass those in China.
“The coronavirus now looks like a pandemic. Markets can cope even if there is big risk as long as we can see the end of the tunnel,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“But at the moment, no one can tell how long this will last and how severe it will get.”
MSCI all country world index fell 3.3 per cent on Thursday to bring its losses so far this week to 8.8 per cent, on course for its biggest weekly decline since a 9.8 per cent plunge in November 2008.
Wall Street shares led the rout as the S&P 500 fell 4.42 per cent, its largest percentage drop since August 2011.
It has lost 12 per cent since hitting a record close on February 19, marking its fastest correction ever in just six trading days while the Dow Jones Industrial Average fell 1,190.95 points, its biggest points drop ever.
In Asia, Australian shares dropped more than three per cent on Friday while futures suggested Japan’s Nikkei is on course to fall more than two per cent.
Fears of a major economic slump sent oil prices to their lowest level in more than a year. US crude futures fell to $US46.28 per barrel.
As investors flocked to the safety of high-grade bonds, US bond yields have plunged, with the benchmark 10-year notes yield hitting a record low of 1.241 per cent. It last stood at 1.274 per cent.
That is well below the three-month bill yield of 1.439 per cent, deepening the so-called inversion of the yield curve.
Historically, an inverted yield curve is one of the most reliable leading indicators of a US recession.
As investors rushed to safe assets, gold stood at $US1,646.4 near seven-year high of $US1,688.9 hit earlier this month.
In currency markets, the yen rose to a three-week high of 109.33 to the dollar and last stood at 109.54.
The euro stood at $1.1005, having jumped over one per cent in the previous session, the biggest gain in more than two years.