Global stocks and oil prices tank as coronavirus death toll rises

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK

Stock markets around the world sold off sharply and oil prices plummeted on Monday, as fears mounted over the spread of the deadly coronavirus.

Major European stock markets fell over 2%, suffering the steepest one-day falls seen so far this year. US stock markets also opened sharply lower.

“The market is back in panic mode about China’s coronavirus,” said Russ Mould, investment director at stockbroker AJ Bell.

By mid-afternoon, the FTSE 100 (^FTSE) was down 2%, Germany’s DAX (^GDAXI) was 2.4% lower, France’s CAC 40 (^FCHI) was down 2.5%, and the Euronext 100 (^N100) lost 2.4%.

The Dow Jones Industrial Average (^DJI) opened down 1.3% in the United States. The S&P 500 (^GSPC) was also down 1.3% and the Nasdaq (^IXIC) dropped 1.7%.

Overnight in China, the Shanghai Composite (000001.SS) collapsed 2.7% overnight and the Hong Kong Hang Seng (^HSI) lost 1.1%. Japan’s Nikkei (^N225) shed 2%.

A pedestrian walks in front of an electric quotation board displaying share prices of world bourses, including the Tokyo Stock Exchange (top C), along a street in Tokyo on January 27, 2020. - Tokyo's benchmark Nikkei index dropped more than two percent January 27 on concerns over the potential impact of a new coronavirus that has killed at least 80 people in China. (Photo by Kazuhiro NOGI / AFP) (Photo by KAZUHIRO NOGI/AFP via Getty Images)
A pedestrian walks in front of an electric quotation board displaying share prices of world bourses, in Tokyo, Japan. Photo: Kazuhiro Nogi/AFP via Getty Images

The sell-off came amid growing fears about the rapid spread of the deadly coronavirus. The BBC reported the death toll from the SARS-like virus has now risen to 81 and almost 3,000 people have been confirmed as infected; 44 cases have been detected outside China.

Worryingly, Chinese health officials warned coronavirus appears to be contagious before symptoms appear, making it more difficult to contain.

Over the weekend, China extended its national Lunar New Year holiday by three days in a bid to prevent travel. Millions of people remain under lockdown in cities across the country.

Oil prices slipped on the crisis. Crude (CL=F) was down 1.8% to $53.21 (£40.75) and Brent (BZ=F) dropped 1.9% to $59.49 (£45.56).

Some of the steepest share price declines came in the travel sector, despite falling oil prices theoretically lowering fuel costs. EasyJet (EZJ.L) dropped 5.6% and British Airways-owner IAG (IAG.L) lost 5.6% in London.

The luxury sector was also under pressure, as China is the world’s biggest luxury market. Burberry (BRBY.L) declined by 4.3% in London, while in Paris Louis Vuitton-owner LVMH (MC.PA) shed 3.5% and Gucci-owner Kering (KER.PA) declined 3.9%.

Commodity stocks were hit, given China’s huge appetite for raw materials. Steel maker Evraz (EVZ.L) fell 3.6%, miner Anglo American (AAL.L) dropped 4.5%, and commodity broker Glencore (GLEN.L) lost 3.9%.

Sebastian Galy, a senior macro strategist at Nordea Bank, said Monday the outbreak could knock between 1% and 1.5% off China’s annual GDP growth. He cited lost work days and the hits to industries like tourism and travel.

“As the death toll rises, all eyes are on the World Health Organisation,” AJ Bell’s Mould said. “So far it has resisted calls to declare the outbreak a health emergency. Should that change there could be restrictions on international trade and travel, putting pressure on a fragile global economy.”