Stocks, oil tumble as China virus rattles markets

Published January 28, 2020
People wear face masks as they arrive at Beijing Capital International Airport in Beijing, on January 25. — Reuters/File
People wear face masks as they arrive at Beijing Capital International Airport in Beijing, on January 25. — Reuters/File

LONDON: Global stocks and oil plunged on Monday as panicked investors fled risky assets for safer bets gold, bonds, the dollar and the yen, after China warned that a deadly new coronavirus was spreading fast.

On equity markets luxury goods makers and airlines suffered particularly as Chinese tourist spending is a key factor for them.

China extended its traditional Lunar New Year holidays to buy time in the fight against the epidemic and fears of a repeat of the 2003 SARS outbreak, which also began in China, spooked investors.

Recent record highs on stock markets gave them plenty of room for a reverse.

Key European stock markets closed up to 2.7 percent lower, while on Wall Street the Dow Jones index managed to keep its losses at around 1.5 percent in the late New York morning.

Oil prices were down 2.5 percent or more, having coming off early lows seen on concerns over demand from China, the world’s top energy consumer.

“The bottom line is that the virus has become deadly and it has caused a major panic in markets,” said Ava Trade analyst Naeem Aslam. Analysts said there were growing fears the crisis could become as bad as the Severe Acute Respiratory Syndrome (SARS) outbreak that hammered markets and the global economy in 2003.

“Coronavirus fears have gripped the all the major European equity benchmarks are nursing big losses,” said analyst David Madden at trading firm CMC Markets UK.

“Stocks that are connected to China are feeling the pain... as traders are afraid the health crisis will curtail economic activity.” The outbreak has led China to lock down the epicentre of the disease, Wuhan -- a city of 11 million people — while imposing tight travel restrictions on a number of other cities including Beijing.

Most Asian markets were closed for the Lunar New Year break but Tokyo was open and fell two percent. Bangkok plunged nearly three percent on worries about the Thai travel sector.

The dollar however rose against the euro and pound.

While the main focus is on the spread of the virus, traders will also be keeping an eye on the release of earnings this week from top companies including Apple, Facebook and Samsung.

Published in Dawn, January 28th, 2020



02 Dec 2021

Funding for polls

THE PTI government’s autocratic mentality is again on full display, even as it feigns adherence to the law....
02 Dec 2021

Soaring prices

PRICES are surging. And they are increasing at a much faster pace than anticipated, burdening millions of...
Ali Wazir’s bail
Updated 02 Dec 2021

Ali Wazir’s bail

IT has been a long time coming, but MNA and Pashtun Tahaffuz Movement leader Ali Wazir has finally been granted bail...
Covid funds controversy
Updated 01 Dec 2021

Covid funds controversy

A COMPREHENSIVE and detailed report by the auditor general of Pakistan on the utilisation of Covid-19 funds by the...
01 Dec 2021

Sindh LG law

THE Sindh Local Government Act, 2013, introduced by the PPP to roll back the Musharraf-era local bodies system in ...
Monster of circular debt
Updated 01 Dec 2021

Monster of circular debt

The crisis facing the energy sector cannot be tackled sustainably without taming the many elephants in the room.