The FTSE 100 has suffered the worst week since the 2008 financial crash as fears over the coronavirus has wiped off more than £200bn.
The FTSE 100 Index closed down 3.18%, a fall of 215 points. This was the lowest closing level since July 2016.
Shortly after opening on Friday, with the FTSE 100 index was down 224.14 points, or 3.3%, at 6,572.26.
The FTSE 250 index fell 527.74 points, or 2.7%, to 19,255.71.
The coronavirus has disrupted international travel and supply chains as three more continents have reported cases of the virus, which is fuelling fears of a recession in the Euro Zone and the US.
On Wall Street Asian stocks tracked a plunge where the benchmark S&P 500 index fell more than 4% on Thursday.
On Thursday the US Dow Jones suffered the largest one day drop in history, falling by almost 1,200 points.
Ranko Berich, Head of Market Analysis at Monex Europe said, “Markets are awash with fear and risk aversion today, with this dire sentiment manifesting as a sea of red in equities and carnage for almost any currency other than the havens. In terms of equity losses and the sheer sharpness of the moves in fixed income and FX, this has to be by far the most dramatic risk-off move since at least 2015, and perhaps earlier.
“Covid-19 is of course the root cause of today’s carnage. Equities have been selling off all week. This morning fixed income markets woke up to the biggest fall in three month LIBOR since December 2008, following a week of OIS markets pricing in increasingly drastic easing measures from the FOMC.
“Markets are effectively holding a gun to the heads of central banks, and daring policy makers to disappoint expectations for rate cuts. And yet even if monetary policy is eased globally on a massive level, it’s unclear how effective this will be in offsetting the incoming shock to global growth.
“Attention is increasingly turning to fiscal stimulus as the solution. The replacement of Sajid Javid as Chancellor may prove a bellwether for global trends if the March budget turns out to be a blockbuster spending spree as expected.
“What is now clear is that virus containment measures will have a massive impact on global growth. But the response of central banks to this shock will be asymmetric and this is likely to drive higher FX volatility, even in the G10 and G3 currencies.
“For some central banks such as the Bank of Canada, domestic conditions may be strong enough to hold policy unchanged in the short run, but the Fed, RBA, and many others are likely to bend the knee to market expectations and cut rates.
“The key questions now are how far the coronavirus outbreak will spread globally, how effective containment measures will be, and what the cost of containment will be to the global economy. No answers will be forthcoming in the near future, and the only certainty is that volatility in global macro markets will remain high.”
Norihiro Fujito, an investment strategist, said: “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.
“But at the moment, no one can tell how long this will last and how severe it will get.”
pek Ozkardeskaya, senior analyst at Swissquote Bank, said: “It is important for investors to understand that the actual sell-off is amplified by a general panic.
“This is the worst week since 2008 and the paranoia grows.”
But Ozkardeskaya added, “To us, it appears that the market has gone ahead of itself and a rebound should be around the corner.
“The coronavirus outbreak has certainly hit businesses, and it might have a longer-than-expected negative impact on company earnings and global growth.
“Yet the extension of the sell-off we are seeing may be a bit too dramatic, even compared with the significant downshift in valuations.
“Market calamity will certainly leave its place to recovery at some point.”