World shares fell to their lowest in two weeks on Monday as worries grew about the economic impact of China’s spreading coronavirus with demand spiking for safe-haven assets such as Japanese yen and Treasury notes, Reuters informs.
The death toll from the coronavirus outbreak in China rose to 81 and the virus spread to more than 10 countries, including France, Japan and the United States. Some health experts questioned whether China can contain the epidemic.
The MSCI All-Country World Index .MIWD00000PUS, which tracks shares across 47 countries, was down 0.42% to its lowest since Jan. 13.
In Europe, stock markets slumped at the start of trading, tracking their counterparts in Asia. The pan-European STOXX 600 index fell 1.4% to its lowest level since Jan. 14. [.EU]
Shares of mining companies .SXPP slumped 3.1%, dragged down by their exposure to China, the biggest decline among the major European subsectors.
“The coronavirus is an economic and financial shock. The extent of that shock still needs to be assessed, but it could provide the spark for an arguably long-overdue adjustment in the capital markets,” Marc Chandler, chief market strategist at Bannockburn Securities, told clients.
In Asia, Japan’s Nikkei average .N225 slid 2.0%, the biggest one-day fall in five months. A Tokyo-listed China proxy, ChinaAMC CSI 300 index ETF (1575.T), fell 2.2%. Many markets in Asia were closed for the lunar new year holiday.
U.S. S&P 500 mini futures ESc1 were last down 0.9%, after falling 1.3% in early Asian trade.
The ability of the coronavirus to spread is getting stronger and infections could continue to rise, China’s National Health Commission said on Sunday. Nearly 2,800 people globally have been infected and 81 in China killed by the disease.
China announced it will extend the week-long new year holiday by three days to Feb. 2 and schools will return from their break later than usual. Chinese-ruled Hong Kong said it would ban entry to people who have visited Hubei province in the past 14 days.
“With most Asian markets closed, fast-money investors are buying risk-off hedges like Treasuries and selling the Nikkei,” said Masahiko Loo, portfolio manager at Alliance Bernstein. “I think this would continue this week, until China markets resume trading next week and the coronavirus outbreak subsides.”