Shares skidded, oil prices sank and the price of gold surged on Monday 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 followed a sell-off Friday on Wall Street and a weekend meeting in Riyadh, Saudi Arabia, of finance ministers and central bank chiefs of the Group of 20 major industrial economies where officials warned the outbreak that began in China is threatening to derail world growth.
Britain’s FTSE 100 sank 2.7% to 7,203.77, while the CAC 40 in Paris lost 3% to 5,850.92. Germany’s DAX fell 2.9% to 13,188.98. New York markets looked set for a downbeat start, with the future for the Dow Jones Industrial Average down 1.9% while the S&P 500 future lost 2.1%.
The price of gold, viewed as a safe haven in times of peril, jumped $33.70 to $1,682.40 per ounce.
Uncertainties are weighing on energy prices as well. Benchmark U.S. crude lost $1.64, or 3.1%, to $51.74 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 $1.87, or 3.3%, to $56.08 per barrel.
South Korea reported another large leap in new cases on Monday, a day after the president called for “unprecedented, powerful” steps to combat the outbreak that is increasingly confounding attempts to stop the spread.
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,
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.
Meanwhile, China cancelled its annual legislative session, usually held in early March, as part of efforts to contain the spread of the virus.
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.
Earlier Monday, officials in Beijing promised more help for companies and the economy, saying they expect their growth targets can still be reached despite the outbreak.
At a news conference Monday, finance and planning officials 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 tail-spin and a wave of refuge-seeking into safe-haven.”
The yield on the 30-year Treasury has dipped to record lows as investors sought the safety of U.S. government bonds. It fell to a record low of 1.886%, according to Tradeweb, from 1.98% late Thursday.
The yield on the more closely followed 10-year Treasury was at 1.38%. That yield, which is a benchmark for mortgages and other kinds of loans, was close to 1.90% at the start of this year.
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.
In currency trading, the U.S. dollar fell to 111.36 Japanese yen from 111.57 yen on Friday. The euro weakened to $1.0825 from $1.0847.
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