NEW YORK (Reuters) – Shares across the world registered their biggest decline in more than two years on Monday and oil prices fell 5% due to a jump in coronavirus cases outside of China, which led to Investors fight for the security of gold and government bonds for fear of the impact on the global economy.
Gold spot prices rose for the fifth session and reached a maximum of 7 years, while the yield on US Treasury bonds. UU. At 30 years he established a historical minimum.
Despite the increase in cases of coronaviruses reported in Italy, South Korea and Iran, the head of the World Health Organization said that “using the word” pandemic “now does not fit the facts, but it can certainly cause fear “.
“We should focus on containment while preparing for a possible pandemic,” Tedros Adhanom Ghebreyesus told reporters in Geneva, adding that the world was not witnessing uncontrolled spread or large-scale deaths.
Concerns about the impact of economic growth and uncertainty about the stress of supply chains triggered the sale of stocks and other high-risk assets.
“It’s not that the numbers have changed dramatically; but what has changed is geography, which adds a new level of concern, “said Art Hogan, chief market strategist at National Securities in New York.
“What the market tries to predict here is:” How big will this be worldwide and when will it begin to peak? ”
At noon, the Dow Jones Industrial Average fell 919.31 points, or 3.17%, to 28,073.1, the S&P 500 lost 102.59 points, or 3.07%, to 3,235.16 and the Nasdaq Composite fell 337.09 points, or 3.52%, to 9,239.50.
The pan-European FTSEurofirst 300 index lost 3.76%, with a drop in the Milan stock market of more than 5% after an increase in virus cases left six dead in Italy and parts of the industrial north of the country in virtual blockade . [.EU]
The MSCI stock indicator worldwide lost 2.82%, its biggest drop in a single day since February 5, 2018, when concerns about an increase in inflation caused the shares to fall.
Shares in emerging markets lost 2.71%. The broader MSCI index of Asia-Pacific stocks outside Japan closed 2.58% lower, while Japan’s markets closed for holidays.
“Everyone sees that this could be another stretch for the economy, and to begin with we were already in a fairly fragile state,” said Elwin de Groot, head of macro strategy at Rabobank. “It could be another step towards a recession in more countries.”
In Asia during the night, the KOSPI of South Korea fell 3.9% after the government declared a maximum alert.
The virus has now killed nearly 2,500 people in China, which has reported about 77,000 cases, and has spread to 29 other countries and territories, with a death toll outside China about two dozen, according to a Reuters count.
Iran, which announced its first infections last week, said it had confirmed 43 cases and eight deaths, with most cases in the holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.
“The idea that the coronavirus has been completely contained has been firmly banished,” said Chris Beauchamp, chief market analyst at IG. “This means that the economic impact forecasts, as they are, should be reviewed, and now a greater impact is expected.”
Federal Funds Futures He noted more rate cuts at the end of this year and a probability close to 20% of a cut next month.
The 10-year reference notes rose for the last time a full point in the price to yield 1.3638%, below 1.47% on Friday. The 30-year bond hit a record low yield of 1,812.
In the currency markets, the Japanese yen strengthened 1.02% to 110.46 per dollar.
The dollar index fell 0.236%, with the euro up 0.17% to $ 1.0861.
“Ultimately, all this is a risk-free operation,” said Marvin Loh, senior global market strategist at State Street Global Markets.
“When you look at the yen, when you look at the Swissie, when you look at the rates, there is no risk. It is probably a reflection, to some extent, that the market has been too optimistic so far … so there is an adjustment process around it. ”
The Korean won dropped 1% to 1,219.06 after falling to its weakest point since August 2019. The currencies of emerging markets, from the Mexican peso and the Turkish lira to the Polish zloty and the Russian ruble , were in red.
In commodity markets, US crude fell 4.93% to $ 50.75 per barrel and Brent was the last one at $ 55.43, 5.25% less on the day.
Among the main industrial metals, copper lost 1.04% to $ 5,705.00 per ton. [MET/L]
“As the virus spreads globally, additional downward revisions in oil demand may be required for this year,” said Jim Ritterbusch, president of Ritterbusch and Associates, in a note.
“Accelerated sale in the stock market has become difficult to ignore for the oil market,” he said.
Rodrigo Campos report; additional reports by Marc Jones in London, Stephanie Nebehay and Michael Shields in Geneva, Medha Singh in Bangalore, Ross Kerber in Boston and Stephanie Kelly and Kate Duguid in New York; Edition by Dan Grebler