Global Stocks Drop as China Sees Jump in Virus Cases
13 Februar 2020 - 03:05PM
Dow Jones News
By Joe Wallace
Global stocks fell following a jump in the number of new
coronavirus cases in the Chinese province at the epicenter of the
outbreak.
Futures tied to the Dow Jones Industrial Average dropped 0.6% a
day after all three major U.S. indexes closed at a record. The
Stoxx Europe 600 retreated 0.6%, and the Shanghai Composite Index
closed down 0.7%.
A nearly 10-fold increase in newly confirmed infections in Hubei
raised the prospect of a longer period of economic disruption in
China than investors previously anticipated, weighing on stock
markets that had climbed for much of the past two weeks.
The number of newly confirmed infections in the province jumped
to 14,840 on Wednesday, from 1,638 a day earlier, after the
provincial health commission started to count clinically diagnosed
cases, on top of people with a positive laboratory test. The death
toll in Hubei, where the illness is thought to have originated,
climbed by 242.
The rising number of cases has prompted "renewed concern around
the dynamics of the coronavirus," said James McCormick, a
strategist at NatWest Markets. "Having had several days of relative
calm, it's a bit of a wake-up call that this process is probably
going to go on for quite some time."
Investors became "a bit complacent" in recent days as the number
of new cases appeared to have slowed, helping push equity markets
in the U.S. and Europe to all-time highs, Mr. McCormick said.
Although the number of confirmed cases in the U.S. is low, at
14, analysts said disruption to business and travel in China could
ripple through the American economy. A drop-off in tourism and
slowdown in exports to China could pull down annualized U.S. growth
by half a percentage point in the first quarter, according to
economists at Goldman Sachs Group.
Before the opening bell in New York, shares in Cisco Systems
fell 5.5% after the telecom gear maker said economic uncertainties
had delayed investment decisions at some companies, denting its
sales growth.
The slide in global stocks was mirrored in commodity markets,
where Brent-crude oil futures fell 0.4% to $55.58 a barrel and
copper futures slipped 0.4% to $2.59 a pound. The novel coronavirus
will lead to the first drop in global oil demand in more than a
decade this quarter, the International Energy Agency said in a
report.
Haven assets climbed. The yield on 10-year Treasurys, which
moves inversely to the price, fell to 1.597%, from 1.62% Wednesday.
Gold futures rose 0.4% to $1,577.90 a troy ounce.
"As time goes on, people are realizing more of the telltale
signs of the economic impact" of coronavirus, said Cliff Tan, East
Asian head of markets research at MUFG.
In one such sign, Chinese auto sales dropped 18% in January to
1.94 million vehicles, according to data from the government-backed
China Association of Automobile Manufacturers on Thursday. Car
sales typically slide during the Lunar New Year holiday, but Mr.
Tan said he expects them to tumble further in February. "How can
you buy a car if you can't get to the dealership?" he said.
The U.K. was an outlier in government-bond markets. The yield on
10-year gilts climbed to 0.654% after Chancellor of the Exchequer
Sajid Javid stepped down, from 0.583% before reports of his
resignation emerged.
The British pound rose 0.5% to $1.3025, weighing on shares in
U.K. companies that earn a large portion of their revenue overseas
and contributing to a 1.5% decline in the FTSE 100 equity
benchmark.
Sterling and gilt yields rose on the basis that "this could mean
a stronger hand on the fiscal controls" for Prime Minister Boris
Johnon, said John Wraith, rates strategist at UBS Group. "The
prospect for more significant fiscal loosening or fiscal stimulus
is greater."
Investors have overreacted to Mr. Javid's resignation, according
to Mr. Wraith. The departure appeared to be the result of a
political power struggle rather than a clash over economic policy,
he said.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
February 13, 2020 08:50 ET (13:50 GMT)
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