Global equity markets slumped on Friday as the fast-spreading coronavirus drove investors into safe havens, with gold hitting a fresh seven-year high and the yield on the 30-year U.S. Treasury bond sliding to an all-time low.
The deadly virus spread to hundreds of people in Chinese prisons, contributing to a jump in reported cases beyond the epicenter in Hubei province, including 100 more in South Korea.
The virus has emerged in 26 countries and territories outside mainland China, killing 11 people, according to a Reuters tally. Data shows mainland China had 889 new confirmed cases and 118 deaths, with most of those in the provincial capital of Wuhan, which remains under virtual lockdown.
The CBOE market volatility index, the market’s “fear gauge,” rose more than 13 per cent in the biggest single-day jump since late January. Crude oil prices slid about 1 per cent and the U.S. dollar fell across the board.
Heading into the weekend, investors decided to book profits on the possibility of more coronavirus news, said JJ Kinahan, chief market strategist at TD Ameritrade.
The coronavirus has become this year’s worry, much as the U.S.-China trade war was in 2019, he said.
Canada’s main stock index slipped from record highs on Friday, dragged by energy stocks.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 100.53 points, or 0.56 per cent, at 17,843.53, ending a four session winning streak.
The energy sector dropped 1.8 per cent as crude prices were down, while the financial and industrial sectors lost 0.3 per cent and 1.1 per cent, respectively.
Leading the index were Eldorado Gold Corp., up 30.5 per cent, Altus Group Ltd., up 7.1 per cent, and MAG Silver Corp., higher by 6.9 per cent.
Lagging shares were CCL Industries Inc., down 17.5 per cent, Teck Resources Ltd., down 15.4 per cent, and Enerflex Ltd., lower by 14.4 per cent.
MSCI’s gauge of stocks across the globe shed 0.85 per cent and emerging market stocks lost 1.13 per cent.
The pan-European STOXX 600 index lost 0.49 per cent as shares fell from record highs on Thursday. A raft of disappointing earnings added to fears about the global impact of the coronavirus outbreak.
Auto stocks led losses in Europe, down 1.9 per cent in their worst session in four weeks. The sector is the worst-performing among major regional sectors, off more than 8 per cent so far this year.
On Wall Street, the Dow Jones Industrial Average fell 227.3 points, or 0.78 per cent, to 28,992.68, the S&P 500 lost 35.55 points, or 1.05 per cent, to 3,337.68 and the Nasdaq Composite dropped 174.38 points, or 1.79 per cent, to 9,576.59.
U.S. stocks were beaten down by concerns about the virus and after data showed U.S. business activity stalled in February, signaling a contraction for the first time since 2016.
U.S. chipmakers fell sharply. The Philadelphia Semiconductor Index slid 2.99 per cent, on track for its worst one-day drop since Jan 31, when fears about the health crisis pummeled markets.
A flash reading of the IHS Markit services sector Purchasing Managers’ Index dropped to its lowest level since October 2013. The manufacturing sector also clocked its lowest reading since August.
Heavyweights Microsoft Corp, Amazon.com Inc and Apple Inc led U.S. stocks lower for a second straight day.
The dollar index fell 0.587 per cent, with the euro up 0.67 per cent to $1.0855.
The Japanese yen strengthened 0.52 per cent versus the greenback at 111.57 per dollar.
While markets had largely brushed aside fears of long-term economic damage from the virus, a steady drip of new cases in countries beyond China has kept concerns alive.
Yields on the benchmark 10-year U.S. Treasury note fell below 1.5 per cent for the first time since early September, while the 30-year long bond fell to 1.886 per cent, an all-time low.
The 10-year note rose 20/32 in price to push its yield down to 1.4595 per cent.
Germany’s 10-year government bond yield bounced off four-month lows after a batch of business surveys delivered healthier-than-expected views of the euro zone economy.
Oil prices slid as investors fretted about crude demand being pinched by the impact of the coronavirus outbreak, while leading producers appeared to be in no rush to curb output.
Brent crude settled down 81 cents at $58.50 a barrel. U.S. crude dropped 50 cents to settle at $53.38 a barrel.
U.S. gold futures settled up 1.7 per cent at $1,648.80 an ounce.
Spot gold rose 3.7 per cent for the week, marking its biggest weekly gain since early August.