Global Stocks Fall on Virus Fears 02/28 05:46
Global stock markets plunged further Friday on spreading virus fears,
deepening a global rout after Wall Street endured its biggest one-day drop in
(AP) -- Global stock markets plunged further Friday on spreading virus
fears, deepening a global rout after Wall Street endured its biggest one-day
drop in nine years.
Germany's DAX skidded more than 5%, Tokyo and Shanghai closed 3.7% lower and
New York markets looked set for more losses with the futures for the Dow Jones
Industrial Average and S&P 500 down 2.3%.
Investors had been growing confident the disease that emerged in China in
December might be under control. But outbreaks in Italy, South Korea, Japan and
Iran have fueled fears the virus is turning into a global threat that might
derail trade and industry.
Anxiety intensified Thursday when the United States reported its first virus
case in someone who hadn't traveled abroad or been in contact with anyone who
Virus fears "have become full-blown across the globe as cases outside China
climb," Chang Wei Liang and Eugene Leow of DBS said in a report.
In early trading, London's FTSE 100 sank 2.8% to 6,602.24 and Frankfurt's
DAX tumbled 5% to 11,750.10. France's CAC 40 lost 3.9% to 5,274.32.
Markets in China and Hong Kong had been doing relatively well despite virus
fears. Mainland markets were flooded with credit by authorities to shore up
prices after trading resumed following an extended Lunar New Year holiday.
Chinese investor sentiment also has been buoyed by promises of lower interest
rates, tax breaks and other aid to help revive manufacturing and other
But now, major companies are issuing profit warnings, saying factory
shutdowns in China are disrupting supply chains. They say travel bans and other
anti-disease measures are hurting sales in China, an increasingly vital
In Asian trading on Friday, the Nikkei 225 in Tokyo tumbled 3.7% to
21,142.96 and the Shanghai Composite Index also fell 3.7%, to 2,880.30. Hong
Kong's Hang Seng lost 2.5% to 26,129.93.
The Kospi in Seoul fell 3.3% to 1,987.01 and Sydney's S&P-ASX 200 sank 3.2%
to 6,441.2. India's Sensex skidded 3.6% to 38,331.87. New Zealand and Southeast
Asian markets also retreated.
On Thursday, the S&P 500 fell 4.4% to 2,978.76. The index is down 12% from
its all-time high a week ago, putting the market into what traders call a
Some analysts have said that was overdue in a record-setting bull market,
though Mizuho Bank noted hitting that status in just six days was "the fastest
correction since the Great Depression" in the 1930s.
Investors came into 2020 feeling confident the Federal Reserve would keep
interest rates at low levels and the U.S.-China trade war posed less of a
threat to company profits after the two sides signed a truce in January.
The market's sharp drop this week partly reflects increasing fears among
many economists that the U.S. and global economies could take a bigger hit from
the coronavirus than previously thought, weakening consumer confidence and
The Dow shed 1,190.95 points on Thursday, its largest one-day point drop in
history, bringing its loss for the week to 3,225.77 points, or 11.1%. To put
that in perspective, the Dow's 508-point loss on Oct. 19, 1987, was equal to
"It is a race to the bottom for U.S. indices," Jingyi Pan of IG said in a
report. "It may still be too early to call a bottom given the uncertainty
around the matter of the coronavirus impact."
U.S. bond prices soared Thursday as investors fled to safe investments. The
yield on the benchmark 10-year Treasury note, or the difference between the
market price and what an investor will be paid if the bond is held to maturity,
fell to a record low of 1.16%.
A shrinking yield caused by investors shifting money into the relative
safety of bonds and pushing up their market price is a sign of weakening
confidence in the economy.
Most access to the city of Wuhan, a manufacturing hub of 11 million people
at the center of the outbreak, was suspended Jan. 23. The Lunar New Year
holiday was extended to keep factories and offices closed. The government told
the public to stay home.
China has begun trying to reopen factories and other businesses in areas
with low risk after shutting down much of its economy to stem the spread of the
infection. Travel controls remain in effect in many areas and elsewhere
governments are tightening anti-disease controls as new cases mount.
Japan is preparing to close schools nationwide and officials on the northern
island of Hokkaido, where there are more than 60 confirmed cases of the virus,
declared a state of emergency and asked residents to stay home over the weekend
if possible. Saudi Arabia has banned foreign pilgrims from entering the kingdom
to visit Islam's holiest sites. Italy has become the center of the outbreak in
"The more countries that are faced with fighting a pandemic, the wider the
potential for economic disruption and potential for increased recessionary
risks," said Tai Hui of J.P. Morgan Asset Management in a report.
In energy markets Friday, benchmark U.S. crude fell $2.09 to $45.00 per
barrel in electronic trading on the New York Mercantile Exchange. The contract
lost $1.64 on Thursday to settle at $47.09. Brent crude oil, used to price
international oils, sank $2.05 to $49.68 per barrel in London. It declined
$1.25 the previous session to $52.18 a barrel.
The dollar declined to 108.57 yen from Thursday's 109.58 yen. The euro
gained to $1.1054 from $1.0998.