The Dow Jones Industrial Average traded 782 points lower after the start of trading on Monday as investors feared the deadly coronavirus outbreak in China would become a global pandemic.
Shares skidded, oil prices sank and the price of gold surged as the number of people infected or killed by the viral outbreak that began in China surged, heaping more uncertainty on the economic outlook.
The decline delivered a sharp drop on Wall Street after finance chiefs of the Group of 20 major economies warned the outbreak that began in China is threatening to derail world growth.
The dow started the day’s trading down more than 800 points on Monday on fears of the coronavirus becoming a global pandemic
A woman walks past an electronic board showing Hong Kong share index outside a local bank in Hong Kong on Monday
Britain’s FTSE 100 sank 3.5 per cent to 7,147, while the CAC 40 in Paris lost 3.7 per cent to 5,806. Germany’s DAX fell 3.6 per cent to 13,086.
The FTSE MIB in Italy, which has seen a surge in new cases that lead to the lock down of towns and businesses, dropped 4.6 per cent to 23,620.
US markets looked set for a sharp drop. The future for the Dow Jones Industrial Average down 2.6% while the S&P 500 future lost 2.7%.
The price of gold, viewed as a safe haven in times of peril, jumped $35.80 to $1,684.60 per ounce, its highest in seven years.
Another safe haven, U.S. Treasuries, were in high demand. That pushes down the yield, and that for the 30-year bond hit a record low of 1.85%
The yield on the more closely followed 10-year Treasury was at 1.40%. That yield, which is a benchmark for mortgages and other kinds of loans, was close to 1.90% at the start of this year.
Uncertainties are weighing on energy prices as well. Benchmark U.S. crude lost $2.07 or 3.9%, to $51.31 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gave up $2.86, or 5%, to $55.64 per barrel.
South Korea reported another large leap in new cases on Monday. The 70 latest new cases raised South Korea’s total to 833, and two more deaths raised its toll to seven. The latest updates sparked selling of shares, pulling the benchmark Kospi 3.9% lower to 2,079.04.
In Italy, police manned checkpoints around quarantined towns as authorities sought to contain new cases of COVID-19 virus that have made the country the focal point of the outbreak in Europe and fears of its cross-border spread.
The viral outbreak that began in China has infected more than 79,000 people globally and killed more than 2,600 people. China has reported 2,592 deaths among 77,150 cases on the mainland.
Travel restrictions, business closures and other efforts in China aimed at containing the spread of the virus have begun to disrupt supply chains and sales prospects for Apple and other big companies.
As the virus begins to disrupt other countries more severely – with business events being canceled in South Korea and Italy, for example – some economists worry about a hit to economic growth that cannot be easily assuaged by authorities. Central banks can cut interest rates and governments can cut taxes, but that will do little in the short term to ease disruption to supply chains.
Kristalina Georgieva, the head of the International Monetary Fund, said that the virus outbreak “could put the recovery at risk” and said “it would be prudent to prepare for more adverse scenarios.”
Expectations have been building among traders that the Federal Reserve will need to cut interest rates this year to help the economy. They´re pricing in a 90% probability of at least one cut this year, up from an 85% probability a day ago and a 58% probability a month ago.
Officials in Beijing promised more help for companies and the economy, saying they still expect their growth targets can still be reached despite the outbreak.
Finance and planning officials on Monday said they are looking at how to channel aid to businesses after President Xi Jinping publicly promised over the past week to ensure farming and other industries recover quickly.
The government is looking at “targeted tax reduction,” interest rate cuts and payments to poor and virus-hit areas, said an assistant finance minister, Ou Wenhan. “We will do a good job of implementing large-scale interest rate reduction and tax deferral and ensure effective implementation as soon as possible,” he said.
The latest measures failed to lift the Shanghai Composite, which lost 0.3% to 3,031.23, though the smaller Shenzhen A-share market jumped 1.4%.
Elsewhere in the region, the S&P ASX/200 in Sydney lost 2.3% to 6,978.30. Hong Kong’s Hang Seng dropped 1.8% to 26,820.88 and Thailand’s SET index lost 2.5%. India’s Sensex lost 1.2% to 40,689.12. Benchmarks in Jakarta, Taiwan and Singapore fell by more than 1%.
Japan’s markets were closed for a holiday.
Hopes that the outbreak had been contained were premature, Mizuho Bank said in a commentary, “And indeed, fears of secondary infections proliferating outside of China have come home to roost, sending risk assets in a tailspin and a wave of refuge-seeking into safe-haven.”
In currency trading, the dollar fell to 111.38 Japanese yen from 111.57 yen on Friday. The euro weakened to $1.0819 from $1.0847.
The steep declines followed a drop in S&P 500 futures of 1.3 per cent while the Nasdaq futures fell 1.8 per cent before the opening.
Shares skidded in Asia on Monday after reports of a surge in new virus cases outside China.
Fears mounted on Monday that the coronavirus outbreak in China will grow into a pandemic with disruptive and deadly consequences for countries around the world, after sharp rises in infections in South Korea, Italy and Iran.
The decline followed a sell-off Friday on Wall Street.
South Korea’s Kospi dropped 3 per cent to 2,098.37, while the S&P ASX/200 in Sydney lost 2.3 per cent to 6,975.20.
Hong Kong’s Hang Seng dropped 1.5 per cent to 26,903.84 and the Shanghai Composite index lost 0.3 per cent to 3,029.22.
Benchmarks in Jakarta, Taiwan and Thailand fell by more than 1 per cent and India’s Sensex lost 1 per cent to 40,755.23.
Another large jump in new cases was reported in South Korea on Monday, a day after the the president called for ‘unprecedented, powerful’ steps to combat the outbreak that is increasingly confounding attempts to stop the spread.
Hopes that the outbreak had been contained were premature, Mizuho Bank said in a commentary, ‘And indeed, fears of secondary infections proliferating outside of China have come home to roost, sending risk assets in a tailspin and a wave of refuge-seeking into safe-haven.’
Stocks fell and bond prices jumped Friday on Wall Street amid signs the viral outbreak is weighing on US companies.
The S&P 500 fell 1.1 per cent to 3,337.
The Dow Jones Industrial Average fell 0.8 per cent to 28,992.
The Russell 2000 index of smaller company stocks gave up 1.1 per cent, while the tech-heavy Nasdaq lost 1.8 per cent to 9,576.
Technology companies, which have much greater exposure to China than other industries, fell the most.
Chipmakers, which rely heavily on China for both sales and supply chains, were some of the worst hit. Advanced Micro Devices slid 7 per cent, while Nvidia fell 5.6 per cent.
Data from IHS Markit show US manufacturing and business activity slowed in February from the previous month, coming in below analysts’ expectations.
Travel restrictions, business closures and other efforts in China aimed at containing the spread of the virus have begun to disrupt supply chains and sales prospects for Apple and other big companies.
Companies that depend on consumer spending, especially in travel-related industries, also fell broadly.
Marriott International shed 2.7 per cent and Carnival fell 1.8 per cent.
American Airlines dropped 3.2 per cent. General Motors lost 2.2 per cent and other automakers slipped as the virus hurts auto sales in China
The yield on the 30-year Treasury has dipped to record lows as investors sought the safety of US government bonds.
fficers from the Korea Pest Control Association disinfect a shop at Mangwon Market in Seoul on Monday
It fell to a record low of 1.886 per cent, according to Tradeweb, from 1.98 per cent late Thursday.
The yield on the more closely followed 10-year Treasury was at 1.47 per cent.
That yield, which is a benchmark for mortgages and other kinds of loans, was close to 1.90 per cent at the start of this year.
The price of gold also rose, surging $14.50 to $1,663.30 per ounce.
Expectations have been building among traders that the Federal Reserve will need to cut interest rates this year to help the economy.
They’re pricing in a 90 per cent probability of at least one cut this year, up from an 85 per cent probability a day ago and a 58 per cent probability a month ago.
Uncertainties are weighing on energy prices as well.
Benchmark US crude lost $1.21 to $52.17 per barrel in electronic trading on the New York Mercantile Exchange.
It lost 50 cents to $53.38 per barrel on Friday.
Brent crude, the international standard, gave up $1.41 to $56.53 per barrel.
The US dollar slipped to 111.54 Japanese yen from 111.57 yen on Friday. The euro weakened to $1.0823 from $1.0847.