STOCK MARKET BSE NSE

World stocks slide on signs that coronavirus outbreak is spreading

Microsoft said the outbreak in China was hurting it more than expected. Frankfurt airport said it would reduce some staff work hours as it saw a heavy drop in aviation.

Published: 28th February 2020 10:41 AM  |   Last Updated: 28th February 2020 10:43 AM   |  A+A-

A woman walks past an electronic board showing Hong Kong share index outside a local bank in Hong Kong, Thursday, Feb. 27, 2020. Shares fell in Asia on Thursday after President Donald Trump announced the U.S. was stepping up its efforts to combat the virus outbreak that began in China.

A woman walks past an electronic board showing Hong Kong share index outside a local bank in Hong Kong, Thursday, Feb. 27, 2020. Shares fell in Asia on Thursday after President Donald Trump announced the U.S. was stepping up its efforts to combat the virus outbreak that began in China. (Photo | AP)

By Associated Press

Global stock markets fell Thursday on concerns that the coronavirus was spreading to more countries, putting further strain on businesses and supply chains across the world.

In Europe, where new cases were being reported, Germany's DAX lost 2.2 per cent to 12,496 and the CAC 40 in Paris dropped 2.3 per cent to 5,555. In London, the FTSE 100 lost 1.9 per cent to 6,907. The future for the Dow Jones Industrial Average fell 1 per cent and the future contract for the S&P 500 was 0.9 per cent lower.

Traders are concerned the global economy could stumble as major industrial countries struggle to contain the outbreak.

Microsoft said the outbreak in China was hurting it more than expected. Frankfurt airport said it would reduce some staff work hours as it saw a heavy drop in aviation. Shares in airlines like International Airlines Group and easyJet, a big European budget carrier, were down by double digits.

ALSO READ: Asia stocks fall on virus fears after Wall Street endured biggest plunge in nine years

“Previous crisis playbooks have all revolved around buying the dip in equities, so I wonder just how much further the fire sale will go before the market at least starts to scale in again," analyst Stephen Innes of AxiCorp. said in a report. “But based on last night's price action, it does appear that any bounce in stocks is likely to be short-lived. And eventually, the markets could fall deeper as investors start to think what's the point of trying to pick the bottom in the short term."

President Donald Trump announced late Wednesday that the U.S. was stepping up its efforts to combat the virus outbreak that began in China, as the number of cases surpassed 81,000.

He said he was open to spending “whatever's appropriate” to fight the virus, after the Senate Democratic Leader Chuck Schumer of New York suggested $8.5 billion instead of the requested $2.5 billion. He put Vice President Mike Pence in charge of the response to the virus outbreak.

Trump said he didn't believe a pandemic was inevitable, though health officials standing beside him warned more infections are coming. And shortly after Trump spoke, the government announced that another person in the U.S. was infected — someone in California who appears not to have the usual risk factors of having traveled abroad or being exposed to another patient.

Japan's Nikkei 225 index lost 2.1 per cent to 21,948.23, while in Australia, the S&P ASX/200 dropped 0.8 per cent to 6,657.90. Hong Kong's climbed 0.3 per cent to 26,778.62.

In South Korea, where 334 new cases of the virus were reported, the Kospi dropped 1.1 per cent to 2,054.89. The central bank downgraded its growth estimate for 2020 to 2.1 per cent from 2.3 per cent and said the virus outbreak would have a short-term impact on business activity, after the economy expanded at its slowest pace in a decade last year. The Bank of Korea kept its key policy rate unchanged, at its current record low 1.25 per cent.

The Shanghai Composite index rose 0.1 per cent to 2,991.33, while shares fell in Taiwan and most of Southeast Asia. Thailand's benchmark rose 1.5 per cent after tumbling 5.1 per cent on Wednesday following reports of newly discovered virus cases.

Investors have been moving more money from stocks into bonds in the wake of the outbreak.

The yield on the 10-year Treasury was at 1.29 per cent Thursday, down from 1.34 per cent. The yield on the 3-month Treasury bill edged up to 1.51 per cent. The inversion in the yield between the 10-year and the 3-month Treasurys is a red flag for investors because it has preceded the last seven recessions.

Benchmark crude gave up $1.20 to $47.53 per barrel in electronic trading on the New York Mercantile Exchange. On Wednesday it lost $1.17. Brent crude oil, the international standard, shed $1.28 to $51.53 per barrel, having dropped $1.52 the previous day.

Gold, which is considered a haven of value by investors, climbed $7.90 to $1,651 per ounce.

The dollar fell to 109.91 Japanese yen from 110.40 yen on Wednesday. The euro strengthened to $1.0947 from $1.0884.

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