LONDON (Reuters) – Global stock markets fell on Friday when business disruptions due to the spread of the coronavirus epidemic worsened, fueling fears of a prolonged economic slowdown.
FILE PHOTO: The signage is seen outside the entrance of the London Stock Exchange in London, Great Britain. August 23, 2018. REUTERS / Peter Nicholls / File Photo
European stocks opened sharply downward, with travel stocks taking the brunt. The pan-European STOXX 600 index fell 2.4% at 0856 GMT. [.EU]
The DAX .GDAXI in Germany fell 2.4%, the FTSE 100 .FTSE in Great Britain fell 1.8% and the CAC 40 .FCHI in France fell 2.4%.
The MSCI All-Country World Index .MIWD00000PUS, which tracks actions in 47 countries, fell 0.72%.
After marking their worst weekly performance since the financial crisis of 2008, global actions, as measured by the index, rose 1.7% this week, as sentiment recovered thanks to the stimulus of policymakers to combat The economic consequences of the virus.
The Federal Reserve of the United States made an emergency interest rate cut of 50 basis points earlier this week. The Bank of Canada and the Reserve Bank of Australia also reduced rates, and investors expect other major central banks to follow suit soon.
Officials and companies in Britain, France, Italy and the United States are struggling to deal with a steady increase in virus infections that in some cases have led to corporate default, office evacuations and panic purchases of daily needs.
The outbreak spread throughout the United States on Thursday, appearing in at least four new states.
“The interaction of fears of virus containment and stimulus measures means that in the short term we expect market volatility to persist,” said Mark Haefele, investment director at UBS Global Wealth Management.
The yields of US Treasury bonds. UU. They fell to an all-time low and Treasury futures increased as investors increased the stakes that the Federal Reserve will continue this week’s surprising rate cut with greater relaxation.
The yield on 10-year Treasury bonds of reference US10YT = RR fell to a record low of 0.7650% on Friday.
The president of the Federal Reserve of Minneapolis, Neel Kashkari, said Thursday night that the Fed could further reduce rates if necessary.
Money markets are setting prices on another cut of 25 basis points from the current range of 1% to 1.25% at the next Fed meeting from March 18 to 19 and a cut of 50 basis points in April.
The rapid fall in yields hit the dollar, which fell to a minimum of six months against the yen and about a minimum of two years against the Swiss franc. [FRX/]
The Bund’s 10-year benchmark performance in Germany fell to a minimum of six months at a surprising distance from last year’s record lows. [GVD/EUR]
The flu-like virus emerged late last year in the central Chinese city of Wuhan and has since spread to more than 80 countries. It has claimed more than 3,000 lives, and although new infections have slowed in China, there are concerns that other countries are not prepared.
Travel restrictions and factory closures aimed at curbing the spread of the virus are expected to put pressure on global growth.
Many investors expected the publication of nonfarm payrolls in the US. UU. Later on Friday. Recent US economic data has been encouraging, but concerns about the epidemic are likely to overshadow any sign of a strong labor market.
Previously in Asia, the broader MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS fell 2.1%, while Japan’s Nikkei stock index .N225 sank 2.94%. Australian stocks fell 2.44%.
Shares in China CSI300. fell 1.22% while shares in Hong Kong. HIS, another city heavily affected by the virus, fell 2.12%.
Against the Japanese yen JPY =, the dollar fell to a minimum of six months and was the last at 105.77 yen. The dollar also sank to a minimum of two years of 0.9410 Swiss franc CHF = EBS.
The pound sterling = D3 traded about a maximum of one week against the dollar.
The euro EUR = EBS gained 0.3% to negotiate $ 1.1271. Euro zone markets are valuing 93% chance of the European Central Bank reducing its deposit rate, now minus 0.50%, by 10 basis points next week.
The single currency has now reversed all of its previous losses of the year, going from less than $ 1.08 a few weeks ago to more than $ 1.12.
ING analysts said they were targeting $ 1.15 in the coming weeks, as aggressive US rate cuts. UU. They contrasted with the limited margin of action in the European Central Bank.
“For now, expect the USD’s weakness against G10 FX to continue, and the G10 FX segment to surpass EM FX, with carry trades under pressure,” they said in a research note.
Oil prices also fell due to concerns that non-OPEC oil producers may not accept production cuts even though global energy demand is weakening.
US crude CLc1 fell 1.63% to $ 45.15 per barrel, while Brent LCOc1 fell 1.8% to $ 49.10, with concerns over a decrease in global demand due to virus outbreaks and uncertainty over production cuts that hurt prices . [O/R]
Ritvik Carvalho report; Additional reports by Tommy Wilkes in London and Stanley White in Tokyo