Via The New York Times: Global Stocks Plummet Over Coronavirus Concerns. Excerpt and then a comment:
Spreading coronavirus outbreaks in Italy and in South Korea over the weekend incited broad slides in global stock markets on Monday, as investors feared that the economic disruption already seen in China might affect other economies as well.
Futures markets indicated that Wall Street would suffer a steep decline when trading begins in the United States, with airline and technology stocks hit in premarket trading. The S&P 500 is set to fall more than 2 percent and the Dow Jones industrial average tumble more than 800 points. Delta Air Lines and American were both more than 3 percent lower, while shares of Apple were down by 3.5 percent. Oil prices also fell as demand for crude waned because of concerns about a widening economic slowdown.
Investors have been on edge since the start of the crisis because of the outsize role that China’s factories play in global business, as well as being a huge consumer market itself. Markets were sanguine last week, but fresh reports that the virus is not contained are “signaling alarm bells,” a market analyst at Citigroup wrote Monday.
The South Korean market ended 3.9 percent lower, after a surge in cases of the coronavirus disease prompted President Moon Jae-in on Sunday to put the country on its highest level of alert.
In Europe, most stock benchmarks were down 3 percent or more.
The FTSE 100 in Britain slid 3 percent, while France’s CAC 40 was down 3.5 percent. The DAX in Germany also fell 3.5 percent.
The FTSE MIB index, which measures stocks on the Borsa Italiana in Milan, fell 4.6 percent. The Italian government locked down at least 10 towns over the weekend near Milan, the country’s financial capital and a key industrial center, after scores of new cases emerged there.
Haven investments like gold and Treasuries have rallied, while shares in luxury companies like LVMH and Kering have tumbled. Shares in EssilorLuxottica, a French-Italian high-end eyeglass maker, were down almost 5 percent. Shares in travel and leisure groups were also lower.
Stock markets in Asia dropped beyond South Korea, although somewhat less. The Australian market fell over 2 percent. Shares in Hong Kong were 1.8 percent lower on Monday afternoon.
Stock markets in mainland China seemed mostly immune on Monday to the sell-off elsewhere. The Shanghai stock market was down only slightly. In southeastern China, the tech-heavy Shenzhen stock market actually rose.
The Chinese authorities have appeared to prop up the country’s domestic stock markets in recent days after a steep slide when they first reopened following the Lunar New Year holiday, which the Chinese government extended in an effort to stop the outbreak. “
The worse the virus outbreak, the better the chance the central bank will release” more money into the financial system, which would tend to support share prices, said Hao Hong, the research director for the international operations of China’s Bank of Communications.
As I write this, just before 7:00 a.m. PST, the Dow Jones is down about 830 points. The TSX is down about 270.
