Coronavirus Fears Send Dow Much Deeper Down

Andrew Cummings
February 27, 2020

The Dow Jones Industrial Average future plummeted by 400 points early on Monday morning, which means that the market is likely to open with a steep drop once the opening bell rings on Wall Street. In Australia, the S&P ASX/200 shed 1.6% to 6,866.60.

Hopes that the outbreak had been contained were premature, Mizuho Bank said in a commentary, 'And indeed, fears of secondary infections proliferating outside of China have come home to roost, sending risk assets in a tailspin and a wave of refuge-seeking into safe-haven'.

Reduced demand for goods and services, and factory closures in China, are also expected to knock the global economy and weigh on trade at a time when Japan and Germany are already teetering on the brink of recession. All 11 sectors in the S&P 500 fell with energy, material and financial shares leading the declines.

MSCI's gauge of stocks across the globe shed 2.82%, its biggest single-day decline since February 5, 2018, when concerns over a spike in inflation sent stocks tumbling.

Treasury yields fell to their most affordable concentrations since 2016 as traders sought basic safety in governing administration bonds, even though the generate curve inversion between the three-thirty day period and 10-12 months U.S. Treasuries deepened in what is frequently viewed as a economic downturn predictor.

Experts at Bespoke Investment noted that in 15 of the past 18 times the stock market fell more than 2 percent on a Monday, it recovered by an average of 1 percent the following day.

Cases of the coronavirus in Italy, the first Western European country with a major outbreak, led to a freakout in global markets as the virus has no vaccine yet and continues to spread. The S&P 500 and Nasdaq are both down about 2.75%.

An yield curve inversion between the 3-month and 10-year U.S. Treasuries deepened in a classic recession sign.

In a rare bright spot, Gilead Sciences Inc, whose antiviral remdesivir has shown promise in monkeys infected by a related coronavirus, rose 2.8%. South Korea's benchmark Kospi dropped almost 4% to a roughly two-month low, with

The Dow fell 1,031 points, or 3.5%, to 27,961 at closing.

USA equities saw steep market sell-off on Monday, with all three major indexes plunging more than 3 percent amid investors' rising risk aversion.

"We must focus on containment while preparing for a potential pandemic", Tedros Adhanom Ghebreyesus told reporters in Geneva, adding that the world was not witnessing an uncontained spread or large-scale deaths.

Gold weakened 0.6 per cent to US$1,632.93 an ounce, the first retreat in more than a week and the biggest fall in nearly three weeks.

"Perhaps investors in the United States still feel a little sheltered from the direct effects of the spread at the moment but should it accelerate in Europe and Asia, I don't think they will for long".

Brent crude, the global oil benchmark, oil was up 0.2% at $56.18 a barrel, after falling sharply Monday. "The Bernie factor is finally rearing its head in the stock market", he said.

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