World stocks set for worst week since 2008 financial crisis

World stocks on Friday set 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 salvage the situation.
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, after suffering their worst day in nine years in the previous session.
Meanwhile, Italy and Spain 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.
MSCI world equity index .MIWD00000PUS, which tracks shares in 49 countries, hit a three-year low in Asian hours and down 16 per cent so far, its worst run since October 2008, when Lehman Brothers’ collapse triggered the global crisis.
According to investec economist, Philip Shaw, 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.
“That is going to be very difficult to escape from given the monetary pedal is very close to the floor in many jurisdictions,” Shaw said.
MSCI’s main European Index .MSER was up 2.7 per cent at the open, after having fallen more than 20 per cent over the past week.
Earlier, Japan’s Nikkei N225 fell 10 per cent before paring losses to close 6 per cent lower.
Australia’s S&P/ASX200 had its wildest trading day on record, falling past 8 per cent before surging.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS wobbled 0.1 per cent higher by late afternoon after falling more than 5 per cent in morning trade.
The slight recovery came as central banks from the US to Australia pumped liquidity into their financial systems and as hopes grew that US Democrats and Republicans could pass a stimulus package on Friday.
There was no such recovery in Italian Government bonds, with the benchmark 10-year yield, which moves inversely to price, raising another 16 basis points in early trade.
Italy is one of the worst-hit countries in Europe from the spread of coronavirus, with the death toll shooting past 1,000 people and the government ordering blanket closures of restaurants, bars and almost all shops.
Oil LCOc1 steadied on Friday, after having dropped 7 per cent on Thursday on US President Donald Trump’s surprise travel ban and on a flood of cheap supply coming into the market from Saudi Arabia and the UAE.
However, major currencies stabilised after furious dollar buying overnight, with the euro finding a footing around $1.1200 and the Aussie AUD recovering to $0.6300.
Reuters/NAN.