Global stock turmoil deepens as investors panic over coronavirus

Edmund Heaphy
Finance and news reporter
A couple wearing face masks at the Vatican on Thursday. (AP Photo/Gregorio Borgia)

The deep market sell-off continued across the Atlantic on Thursday, as US stocks followed their European peers into sharply negative territory and investors gauged the impact of the spiralling coronavirus epidemic.

The S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) both fell by around 2%. Shares on the Nasdaq (^IXIC) were down by more than 2.3%.

The lower US open exacerbated the losses in Europe.

The pan-European STOXX 600 index (^STOXX), which had been down by around 2%, was down by more than 3.7% after trading begin in New York.

The FTSE 100 (^FTSE) was down by more than 3.5% in London. Germany’s DAX (^GDAXI) fell by more than 3.4%, while France’s CAC 40 (^FCHI) declined similarly.

US officials on Wednesday suggested that a new instance of the virus in California had no connection to travel or another known case, raising fears that the virus is set to spread within communities.

Investors in Europe, meanwhile, have begun to assess the longer-term impact of the virus on trade, supply chains, and consumer confidence.

The declines followed a weak trading session in Asia. While stocks climbed slightly in mainland China and Hong Kong on Thursday, Japan’s Nikkei (^N225) fell by over 2.1%. The KOSPI Composite Index (^KOSPI) in South Korea, where there have been almost 1,600 cases, closed more than 1% down.

The MSCI All-Country World Index (ACWI), a broad measure of global stock markets, looked set for its sixth straight day of declines on Thursday.

France, Spain, and Germany have all seen an increase in infections, likely tied to the outbreak in Northern Italy, where over 520 people have contracted the virus and 14 people have died.

Travel industry stocks were among the heaviest hit across Europe, with EasyJet (EZJ.L) declining by around 7%, British Airways-owner IAG (IAG.L) falling by 10%, and holiday operator TUI (TUI.L) down 7%.

German health minister Jens Spahn warned on Wednesday that Germany was at the beginning of a coronavirus epidemic, noting that there were cases springing up that could not be traced back to the original source of the virus in China.

“The infection chains are partially no longer trackable, and that is a new thing,” Spahn said.

“With more new cases being reported outside China, than inside, the centre of gravity as far as the coronavirus has shifted towards Europe, and the rest of the world,” said Michael Hewson, the chief market analyst of CMC Markets.

“This shift has prompted real concerns about the longer-term economic impact of this virus on trade, on ports, on supply chains, and on consumer confidence,” he said.

“These concerns have resulted in a rollercoaster last 24 hours for global stock markets.”

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