· Dow plunges 1,000 points on coronavirus fears, 3.5% drop is worst in two years
Stocks fell sharply on Monday as the number of coronavirus cases outside China surged, stoking fears of a prolonged global economic slowdown from the virus spreading.
The Dow Jones Industrial Average closed 1,031.61 points lower, or 3.56%, at 27,960.80. The S&P 500 slid 3.35% to 3,225.89 while the Nasdaq Composite closed 3.71% lower at 9,221.28. It was the Dow’s biggest point and percentage-point drop since February 2018. The Dow also gave up its gain for 2020 and is now down 2% for the year. The S&P 500 also had its worst day in two years and wiped out its year-to-date gain as well.
Overseas markets fell sharply. The European Stoxx 600 dropped more than 3% while Korea’s Kospi index slid 3.9%.In Hong Kong, the Hang Seng index fell 1.8%.
The Cboe Volatility Index (VIX) — considered to be the best fear gauge on Wall Street — jumped more than 7 points, or about 46%, to 25.04.
The S&P 500 suffered its worst day in two years on Monday as a surge in coronavirus cases outside China rattled investors already worried about valuations following recent record highs.
The fear in Monday’s session came after investors in recent months often downplayed the overall risk related to the new coronavirus. Monday’s drop wiped out all of the S&P 500’s gains for 2020.
S&P 500 sector indexes are mostly still close to their record highs, with the exception of energy .SPNY. The S&P information technology index .SPLRCT tumbled 4.2% on Monday, slammed by losses for chipmakers and Apple (AAPL.O), which rely more than most other U.S. companies on China. The information technology index is down over 7% from its record high on Feb 19, but remains up almost 4% in 2020.
Increased fears that the coronavirus could become a pandemic led to a spike in the number of listings on the New York Stock Exchange hitting 52-week lows. At 503, Monday saw the greatest number of new lows in a session since last August. At the same time, the number of stocks hitting 52-week highs shrank to 278 from over 400 on Friday.
· Coronavirus plunge wipes more than $250 billion from Big Tech stocks
Apple, Facebook, Amazon, Microsoft and Google-parent Alphabet collectively lost more than $250 billion in value as part of a broader market plunge. The tech companies make up nearly one-fifth of the value of the S&P 500, which itself is down more than 3.6%. Apple has the largest exposure to China, as it relies heavily on Chinese manufacturing plants for its top products and on Chinese consumers to buy iPhones.
· Europe stocks sink on fears coronavirus is spreading in Italy; airlines lead losses
European stocks closed sharply lower Monday as investors monitored the continuing spread of the coronavirus beyond China.
The pan-European Stoxx 600 closed down 3.8% provisionally, with travel and leisure stocks tumbling over 6% to lead losses as all sectors slid sharply into the red. Italy’s FTSE MIB was down more than 1,350 points, or 5.5%. The country reported a sharp spike in coronavirus cases over the weekend.
Coronavirus concerns continue to dominate headlines around the world, and there are widespread concerns over the spread of the virus in northern Italy. A seventh person infected with the coronavirus died in Italy on Monday, local media reported, while the number of confirmed cases rose to more than 220 in the country.
The government has placed a dozen towns in the north under quarantine and closed down schools, museums and cinemas while other public events, including soccer matches, have been cancelled and the Venice Carnival cut short.
Iran and South Korea have also seen a sharp rise in cases of the virus. More than 79,400 cases and at least 2,621 deaths have been confirmed worldwide.
· Japan stocks plunge nearly 4% as virus fears grow; Malaysia markets watched amid political turmoil
Stocks in Japan saw sharp declines on Tuesday morning following an overnight plunge on Wall Street amid fears of the economic hit that could result from the ongoing coronavirus outbreak that is spreading beyond China.
Returning from a Monday holiday, the Nikkei 225 plunged 3.97% in early trade, before easing to about 3.65% as shares of index heavyweight Fast Retailing dropped 4.35%. The Topix index also declined 3.92%.
South Korea’s Kospi was 0.11% higher, following sharp losses seen on Monday as the country witnessed a spike in the number of coronavirus cases in recent days. Seoul raised the coronavirus alert to the “highest level” over the weekend, with South Korea now the country with the most cases outside mainland China.
Consumer confidence in South Korea dropped in February to a six-month low, South Korean news agency Yonhap reported Tuesday. The Composite Consumer Sentiment Index for February fell to 96.9, declining 7.3 points from its reading in January, according to data from the Bank of Korea.
Meanwhile, shares in Australia declined as the S&P/ASX 200 fell 1.75%.
Overall, the MSCI Asia ex-Japan index traded 0.21% lower.
Outside of Asia, Italy has also seen a surge in the number of infected, with at least 130 reported cases.
“The jump in cases outside of China raises the risk of a sharper Q1 2020 global economic slowdown,” Kim Mundy, currency strategist at Commonwealth Bank of Australia, wrote in a note. “It also raises the risk that the economic disruption is more prolonged.”
Elsewhere, markets in Malaysia will be watched on Tuesday following recent developments that thrust the country into political uncertainty. The country’s Prime Minister Mahathir Mohamad unexpectedly resigned on Monday, but reportedly agreed to stay on as interim leader until a successor is named.
Following news of the political upheaval, the FTSE Bursa Malaysia KLCI Index closed about 2.69% lower on Monday.
Reference: CNBC, Reuters
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