Dow plunges in biggest-ever points drop on coronavirus pandemic fears

NEW YORK (REUTERS) - The Dow industrials posted the largest-ever points drop on Thursday (Feb 27) as Wall Street led stocks across the globe lower, with traders fretting over the economic impact of the spreading coronavirus.

Oil prices tumbled to their lowest in over a year and the benchmark US Treasury yield set a record low.

No country should make the "fatal mistake" of assuming it will be spared the coronavirus, the World Health Organisation said, as governments from Iran to Australia shut schools, cancelled big events and stocked up on medical supplies in a race to contain the rapid global spread.

On Wall Street, the S&P 500 posted its largest percentage drop since August 2011 as rising numbers of new infections outside China raised fears of a pandemic with unknown economic implications.

"The path of this scourge is unknown, therefore you can't know the economic impact. You can roll the dice but it's a guess," said Mr Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

The Dow Jones Industrial Average fell 1,190.95 points, or 4.42 per cent, to 25,766.64, the S&P 500 lost 137.63 points, or 4.42 per cent, to 2,978.76 and the Nasdaq Composite dropped 414.30 points, or 4.61 per cent, to 8,566.48.

The near 1,200 point drop for the Dow was its largest ever for a single session.

The pan-European STOXX 600 index lost 3.75 per cent, for a more than 10 per cent drop from its record closing high set last week.

MSCI's gauge of stocks across the globe shed 3.32 per cent. Emerging market stocks lost 1.21 per cent. Japan's Nikkei futures lost 4.34 per cent.

The benchmark US Treasury yield touched a record low below 1.25 per cent.

US 10-year notes last rose 11/32 in price to yield 1.2739 per cent, from 1.31 per cent late on Wednesday. The 30-year bond last rose 20/32 in price to yield 1.7714 per cent, from 1.798 per cent.

The dollar fell as investors bet that the Fed would cut interest rates to offset the impact of the spreading coronavirus. With US rates relatively high, and the scope for them to fall much wider, investors are selling the greenback.

"Rate cut expectations have gained momentum and US rate expectations are falling a lot more than they are in the euro zone," said Thu Lan Nguyen, an analyst at Commerzbank.

The dollar index fell 0.685 per cent, the most in over a year, with the euro up 1.06 per cent to US$1.0997. Sterling was last trading at US$1.2888, down 0.12 per cent on the day.

The Japanese yen strengthened 0.66 per cent versus the greenback at 109.70 per dollar.

Gold ended little changed after hitting a fresh seven-year high earlier.

Oil prices plunged on fears of a pandemic that could slow the global economy and dent demand for crude.

US crude fell 5.03 per cent to US$46.28 per barrel and Brent was last at US$51.36, down 3.87 per cent on the day.