NEW YORK: The dollar rose and global equity markets slumped on Thursday after a new methodology that sharply increased the death toll in China from the coronavirus unnerved investors and halted a rally that had lifted US and European stocks to record peaks.
Investors sought safety in US assets, pushing the yield on the 10-year US Treasury note lower as the euro plunged to more than two-year lows against the dollar. The euro also fell to a four-and-a-half-year low against the Swiss franc.
The United States is expected to weather the economic impact of the virus better than the eurozone.
AXA Investment Manager’s chief economist Gilles Moec said the impact of the virus could be part of a “perfect storm” for Europe that hurts the economy for months before it gets compounded by a heated trade battle with the United States.
“We started with the premise that this virus would be worse than SARS and that has now become consensus,” Moec said.
The dollar index was flat, with the euro down 0.23 per cent to $1.0846.
Europe’s main markets followed Asia into red, while stocks on Wall Street traded slightly lower to little changed. MSCI’s gauge of stocks across the globe shed 0.16pc and its emerging markets index lost 0.22pc.
The pan-European STOXX 600 index lost 0.02pc.
On Wall Street, the Dow Jones Industrial Average fell 68.43 points, or 0.23pc, to 29,482.99. The S&P 500 lost 0.89 points, or 0.03pc, to 3,378.56 and the Nasdaq Composite added 2.40 points, or 0.02pc, to 9,728.37.
Oil prices rose, shrugging off bearish reports which cut back demand forecasts for this year on the back of the coronavirus outbreak in China, the world’s biggest oil importer.
Published in Dawn, February 14th, 2020