Markets Slide, Auto Show Canceled as Virus Impact Spreads
LONDON (AP) — Stock markets are heading for their worst week since 2008, Europe’s top auto show has been canceled and companies keep lowering their earnings estimates. Here’s a look at the latest developments:
MARKETS: Share indexes are down sharply again, with losses of over 3% in Japan and Germany. Wall Street is expected to drop further, with futures down 1%. At this pace, stocks are set to have their worst week since 2008, at the height of the global financial crisis. The price of oil is dropping, with Brent close to falling under $50 a barrel for the first time since the middle of 2017.
EVENTS: The Geneva auto show was canceled after Swiss authorities banned large events of more than 1,000 people. The trade fair is a big event, particularly for European automakers, which are already struggling with the need to reduce carbon emissions. Sports events were being canceled in many parts of the world. Tourism is heavily affected, too, with hotels laying off staff. A theme part in Thailand shut down for the foreseeable future.
RUN ON MASKS: Fear of the virus has led to a global run on sales of face masks despite medical experts’ advice that most people who aren’t sick don’t need to wear them. Many businesses are sold out, while others are limiting how many a customer can buy. Amazon is policing its site, trying to make sure sellers don’t gouge panicked buyers.
EARNINGS AND JOBS: British Airways warned that its earnings have been hit as people put off or cancel trips out of fear. The carrier’s owner, International Airlines Group, said it has seen lower demand on its Asian and European routes as well as weaker business travel due to the cancellation of industry events and corporate travel. Philippine Airlines is laying off 300 ground personnel as part of an ongoing restructuring that was aggravated by travel restrictions caused by the virus.
Emerson Electric, which said two weeks ago that it would take a $75 million to $100 million hit because of the virus, said Friday that it’s going to be worse than that. The St. Louis company makes everything from industrial valves to residential air conditioning systems, has substantial production facilities in China. It now anticipates its second-quarter sales will be hurt by at least $100 million to $150 million. Emerson said in a regulatory filing that the longer the virus continues, the less likely it is to see a sales recovery this year. Key facilities in China are operating at 85% capacity after a number of them were shut down. The company said logistics remains challenging and goods are moving only at 75% the normal rate. Transit times are delayed and rates have risen.
ECONOMIC OUTLOOK: Policymakers were downgrading their forecasts due to the widespread disruption to business. The outgoing head of the Bank of England told Sky News that it is unclear how big the economic knock will be.