THE UK stock market plummeted again yesterday, with the FTSE-100 index trading below 5,000 points for prolonged periods amid the intensifying coronavirus crisis, as emergency action by the US Federal Reserve on Sunday failed to stop the rout.

Senior Scottish economist Jeremy Peat yesterday described the current situation as the most uncertain in his 50 years working in this field, as the rapid escalation of the Covid-19 coronavirus outbreak and drastic measures to tackle the global spread continued to drive market sentiment.

The FTSE-100 index of leading shares ended the session down 215.03 points at 5,151.08, having touched an intra-day low of 4,898.79. It has lost around 2,500 points since mid-January.

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In New York, the Dow Jones Industrial Average closed down 2997.1 points or 12.9 per cent at 20,188.52.

Wall Street, which had mounted a rally later on Friday, opened very sharply lower yesterday. Trading was halted for 15 minutes shortly after the open as a plunge of 8% on the S&P 500 index triggered a so-called “circuit-breaker”.

The Fed cut its key interest rate to near-zero as part of a huge package of monetary policy easing measures unveiled on Sunday.

Financial markets were spooked yesterday morning by official data showing China’s factory production had in the opening two months of 2020 posted its sharpest drop since comparable records began three decades ago.

Industrial output in China over January and February was down by a greater-than-expected 13.5% on the same period a year earlier. Reuters noted this was the worst year-on-year movement since its records started in January 1990.

Sterling found itself on the ropes again yesterday.

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The euro traded significantly above 90p, with financial market players observing it was benefiting from being regarded as having a superior “safe-haven” status relative to the pound. The euro was at 5pm yesterday trading around 90.91p, up by 1.32p on its Friday close.

Sterling also dropped further against the dollar. The pound was, at 5pm, trading around $1.2255, down by nearly another cent on its pre-weekend close in London.

Asked about the financial market turmoil, Mr Peat said: “It is primarily the uncertainty because nobody has any idea of what is going to happen in individual economies or indeed [of] the way the global economy operates after this. We don’t know how long. We don’t know how much output is going to be lost. It is just utter, total uncertainty.”

Mr Peat, a former chief economist at Royal Bank of Scotland and a previous director of The David Hume Institute, added: “I can’t see any stabilisation – I would hope for [only] a few weeks but who knows? We just don’t know how long this is going to take.

“It is certainly my most uncertain period in my 50 years working as an economist. This is so difficult for markets, or anyone. No one can forecast.”

Graham Campbell, executive director at Edinburgh-based Saracen Fund Managers, said: “I think the problem just now is that, in the short term, no one just knows what is going on, frankly. You have people not travelling, not going out, not spending. You could write a horrendous scenario for most businesses if you were minded to.”

However, he voiced hopes that the second half of the year would see an improvement.

Mr Campbell said: “I would expect this to be resolved over the next couple of months and, [with a] strong stimulus, things will bounce back, and people who haven’t spent money on travel will travel next year and things will bounce back.”

He flagged liquidity issues for some companies but believed that plunges in the share prices of well-capitalised businesses in the likes of the banking and big-oil sectors had created buying opportunities.

Mr Campbell said: “We have been looking to invest in some of the high-quality businesses that have come back. I think we will look back and think these were absolute bargains.”

He cited Barclays as one example of a bank that had seen its share price plunge but which had sufficient capital.

Mr Campbell also noted that yields on big oil stocks had, with falls in share prices, surged to more than 10 per cent.

He cited his belief that “things will bounce back” after a “tough first half”.

Mr Campbell said: “You [only] know the bottom looking back the way but it does feel we are getting pretty close. Companies can’t make any comments. They don’t know what is going on at the moment – how long it will last.”

He added: “We keep telling investors that share prices are long-term earnings, so any [variations] in short-term earnings should be regarded as an opportunity.”

Mr Campbell said: “We have seen some tough markets over the years but, having seen some big companies falling by 50% in the last few weeks, [it] is extraordinary.”

He cited potential for increased Government spending to boost activity later in the year.

Russ Mould, investment director at stockbroker AJ Bell, said: “While central banks around the world continue to fire everything they have to mitigate against a coronavirus impact on the markets, they weren’t able to prevent further carnage. The FTSE-100 marked lows not seen since the financial crisis.”

He added: “With scores of countries entering lockdown and little certainty on how long such draconian measures might be in place, investors are taking flight even if this means crystallising heavy losses which might ultimately be recovered once the crisis has been averted.”