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Coronavirus: European stocks fall as Trump warns of 'very painful two weeks'

Edmund Heaphy
Finance and news reporter
President Donald Trump speaks about coronavirus on Tuesday. (AP Photo/Alex Brandon)

European stocks fell on Wednesday after dire warnings from US president Donald Trump raised fears that the coronavirus pandemic would cause a global recession.

Late on Tuesday, Trump warned that the US faces a “very very painful two weeks,” while scientists cautioned that the virus could kill up to 240,000 Americans.

The pan-European STOXX 600 index (^STOXX) was down by around 3%. London’s FTSE 100 (^FTSE) fell by more than 4%.

Germany’s DAX (^GDAXI) declined by around 3.2%, while France’s CAC 40 (^FCHI) was 3.4% in the red.

Read more: UK fuel prices see record plunge as coronavirus saps oil demand

“The president finally conveyed the message that 100,000 to 240,000 could die after weeks of minimising the effort and failing to force the production of ventilators,” said Sebastien Galy, a senior macro strategist at Nordea Asset Management.

Trump’s message resonated across global equities markets because it laid bare the “sheer consequences of this crisis,” Galy said on Wednesday.

“I want every American to be prepared for the hard days that lie ahead. We’re going through a very tough few weeks,” Trump said on Tuesday.

The sharp losses in Europe followed a weak trading session Asia.

China’s SSE Composite Index (^SSEC) fell by almost 0.6% on Wednesday, while the Hang Seng (^HSI) was down by more than 2.2% in Hong Kong at market close.

Japan’s Nikkei (^N225) declined by 4.5% after purchasing managers’ index data suggested that activity in the country’s manufacturing sector had shrunk at its fasted pace in more than a decade.

Read more: World Bank warns of economic pain and poverty for Asia

“Overall, the cascading impact of COVID-19 on the global economy is diminishing the chances of a V-shaped recovery,” said Joe Hayes, an economist at IHS Markit, referring to a sharp recession that is nonetheless followed by a rapid upswing.

The KOSPI Composite Index (^KOSPI) in South Korea closed 3.9% in the red.

Futures were also pointing to a lower open for US stocks on Wednesday.

S&P 500 futures (ES=F) fell by around 2.7%, Dow Jones Industrial Average futures (YM=F) were down by 2.8%, while Nasdaq futures (NQ=F) were down by almost 2.5%.

March was the worst month for US stocks since the financial crisis. The S&P 500, which fell 12.5% in the month, is down 20% so far this year.