Coronavirus Fears Send Markets Crashing
Fortunly photo by Milena Misovic
Growing fears over the deadly coronavirus outbreak are sending markets into a tailspin. Although the disease originated in China, the shockwaves are being felt way beyond its borders.
European stocks temporarily fell to their lowest level in three months last week. Both the Dow and the S&P dropped by 1.6% in a single day, marking the largest daily decline in US stocks since October 2019. This practically wiped out recent market gains in all 11 sectors with investors rushing to safe haven assets like gold that rose by 0.8% to $1,578. Tourism, travel, energy and tech companies with strong ties to China were hit the hardest.
Apple stocks fell by 2.9%, American Airlines declined by 5.5% and Wynn Resorts which has a strong presence in China’s gambling hotspot Macau dropped by a staggering 8.1%. The same drop was recorded by mining giant Freeport-Mcmoran.
Meanwhile, oil prices fell for a fifth session in a row this week. Brent crude futures, the global oil benchmark, slumped by 2.3% to close at $59.32 a barrel - a three-month low.
Concerns over the true magnitude of the outbreak, which killed over 100 people in China and infected thousands globally, further intensified over the weekend.
New research challenged the notion that the virus is linked to the Huanan Wholesale Seafood Market in China’s Wuhan and suggested the outbreak originated elsewhere. In addition, fresh revelations about human-to-human transmissions are certain to extend the stock market decline.
“China is the biggest driver of global growth, so this couldn't have started in a worse place,” said Alec Young, managing director of global markets research at FTSE Russell. “Markets hate uncertainty, and the coronavirus is the ultimate uncertainty in that no one knows how badly it will impact the global economy.”
Chief investment officer at Cresset Capital, Jack Albin, echoed that sentiment, explaining that the current mood among investors is to “hit the sell button first and worry about the details later”.
China’s financial markets are to remain closed until February 3 with Beijing hoping to delay panic selling.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
