Stocks plunge, gold surges as virus worries mount

NEW YORK • Wall Street stocks plunged in opening trading yesterday, in a dramatic day of global equity sell-offs on mounting worries that the spread of the coronavirus will derail growth.

Just after the opening bell, the benchmark Dow Jones Industrial Average stood at 28,015.53, down 3.4 per cent or nearly 1,000 points.

The broad-based S&P 500 dove 3.2 per cent to 3,232.63, while the tech-rich Nasdaq Composite Index sank 4.2 per cent to 9,178.24.

This came after markets in Europe and Asia also saw red, while safe havens like gold soared.

"Markets hate uncertainty and the coronavirus represents the most uncertain macro risk markets have faced in years," said Mr Alec Young, managing director of global markets research at FTSE Russell.

"Investors are also acutely aware that many misjudged the economic severity of the virus early on, making them more open to entertaining worst-case scenarios now."

In Europe, most stock benchmarks were down 3 per cent or more. The FTSE 100 in Britain slid 3 per cent, while France's CAC 40 was down 3.5 per cent. The DAX in Germany also fell 3.5 per cent.

Shares on Milan's stock market suffered their largest intra-day decline since June 2016, while the yield on 10-year bonds jumped as the Italian government tried to contain the disease's worst outbreak in Europe. The FTSE MIB index, which measures stocks on the Borsa Italiana in Milan, fell 4.6 per cent.

The Italian government has locked down at least 10 towns over the weekend near Milan, the country's financial capital and a key industrial centre, after scores of new cases emerged there.

South Korea bore the brunt of losses in Asia, with the Kospi index slumping 3.9 per cent after the government on Sunday put the country on its highest level of alert.

Other stock markets in Asia also fell, although somewhat less. Singapore's Straits Times Index closed down 38.83 points or 1.2 per cent to 3,142.2. Shares in Hong Kong were 1.8 per cent lower and the Australian market fell over 2 per cent.

Countries Singaporeans should avoid:

• CHINA: Defer all travel to Hubei province and non-essential trips to the mainland

• SOUTH KOREA: Defer all non-essential travel to Daegu city and Cheongdo county

Among countries/regions restricting entry to or screening travellers from Singapore:

• INDIA: Avoid non-essential travel to Singapore; arrivals from Singapore will be screened

• ISRAEL: Avoid non-essential travel to Singapore; ban on foreign nationals who have been in Singapore in last 14 days

• KUWAIT: Avoid travel to Singapore; Kuwaiti citizens in Singapore to leave immediately

• QATAR: Avoid non-urgent travel to Singapore

• SARAWAK: 14-day quarantine for travellers arriving from Singapore

• SOUTH KOREA: Avoid travel to Singapore

• THAILAND: Postpone trips to Singapore; more screening for travellers arriving from Singapore

Among countries/regions that have barred/restricted travellers from other countries:

• AUSTRALIA: Ban on foreign nationals who have been in mainland China in last 14 days

• BRITAIN: Avoid all travel to Hubei and non-essential trips to China; 14-day self-quarantine for visitors from South Korea

• CANADA: Avoid all travel to Hubei and non-essential trips to China; exercise high degree of caution in South Korea

• EGYPT: Ban on all tourism flights in and out of China

• INDIA: Screening for passengers arriving from China, Hong Kong, Kathmandu, Indonesia, Vietnam and Malaysia

• INDONESIA: Ban on travel to and from China

• ISRAEL: Ban on all foreign nationals who have been in China, Thailand, Singapore, Hong Kong and Macau in last 14 days

• SOUTH KOREA: Ban on all foreign nationals who have been in Hubei in last 14 days

• UNITED STATES: Ban on foreign nationals who have been in mainland China in last 14 days; do not travel to China, exercise increased caution in South Korea, Japan, Hong Kong and Macau

Stock markets in mainland China seemed mostly immune, however. The Shanghai stock market was down only slightly yesterday, and the tech-heavy Shenzhen stock market actually rose.

The Chinese authorities have appeared to prop up the country's domestic stock markets in recent days after a steep slide when they first reopened following the Chinese New Year holiday, which the government extended in an effort to stop the outbreak.

"The worse the virus outbreak, the better the chance the central bank will release" more money into the financial system, which would tend to support share prices, said Mr Hao Hong, research director for the international operations of China's Bank of Communications.

The stock market in Japan was closed yesterday, which was a public holiday in honour of the Emperor's birthday.

The flight to safety was just as resounding. Gold surged 2.5 per cent to a seven-year high of US$1,680 an ounce, taking its gains for the year past 10 per cent.

Bonds rallied too. Ten-year US Treasury yields dropped to 1.401 per cent, their lowest since July 2016. The 30-year Treasury touched a record low at 1.855 per cent and German yields dropped to minus 0.475 per cent, their lowest in more than four months.

Oil prices are once again under pressure, as worries grow over the virus' effect on economic activity and energy demand.

Prices for Brent crude, the international benchmark, fell more than 3.5 per cent to about US$56.40 a barrel yesterday. West Texas Intermediate, the main US benchmark, fell about the same amount, to about US$51.50 a barrel. The lower prices will add to pressure on the Organisation of Petroleum Exporting Countries and Russia to take measures to reduce oil supplies at their next meeting next month.

"Everybody sees that this could be another leg down for the economy, and we were already in quite a fragile state to begin with," said Rabobank's head of macro strategy Elwin de Groot. "It could be another step towards a recession in more countries."

AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS