LONDON (Reuters) – World stocks were set on Friday for their worst week since the 2008 financial crisis, with coronavirus panic-selling hitting nearly every asset class and investors fretting that central bank action may not be enough to soothe the pain.
European stock markets were slightly higher on Friday on hopes governments will step up spending, but only after several sessions of sustained, heavy losses as investors faced the possibility of a global recession that could be prolonged.
Warning signs still flashed, with Italian government bonds tanking again on Friday morning, after suffering their worst day in nine years in the previous session.
Italy and Spain meanwhile imposed trading curbs, banning short-selling of dozens of stocks, to stem a market rout triggered by the coronavirus outbreak that saw European stock exchanges post their worst-ever losses on Thursday.
The MSCI world equity index .MIWD00000PUS, which tracks shares in 49 countries, hit a three-year low in Asian hours and is down 16% this week so far — its worst run since October 2008 when Lehman Brothers’ collapse triggered the global crisis.
“Markets are quite prepared for a period of falling output. The real fear is that you get second-round effects that result in a nastier, longer recession in the global economy,” said Investec economist Philip Shaw.
“That is going to be very difficult to escape from given the monetary pedal is very close to the floor in many jurisdictions.”
MSCI’s main European Index .MSER was up 2.7% at the open, after having fallen more than 20% over the past week.