Global share markets and oil fell on Monday, safe-haven gold surged and U.S. Treasury yields reached their lowest since mid- 2016, as coronavirus cases spread outside China, darkening the outlook for world growth.
Europe took a beating early on, with Italy plunging more than 4% after a spike in cases of the virus left parts of the country’s industrial north in virtual lockdown. That put Milan on course for its worst day since 2016.
Frankfurt and Paris were both down more than 3% and London’s FTSE dropped 2.5%, meaning at least $350 billion had been wiped off the region’ market value.
The flight to safety was just as resounding. Gold surged 2.5% to a seven-year high of $1,680 an ounce, taking its gains for the year past 10%.
Bonds rallied, too. Ten-year U.S. Treasury yields dropped to 1.401%, their lowest since July 2016. The 30-year Treasury touched a record low at 1.855% and German yields dropped to -0.475%, their lowest in more than four months.
“Everybody sees that this could be another leg down for the economy, and we were already in quite a fragile state to begin with,” Experts said . “It could be another step toward a recession in more countries.”
In Asia, South Korea’s KOSPI slumped 3.9% after the government declared a high alert. The number of infections jumped to 763 and deaths rose to seven.
Australia’s benchmark index slid 2.25% and New Zealand fell about 1.8%. China’s blue-chip CSI300 index closed down 0.4%.
That left MSCI’s broadest index of Asia-Pacific shares outside Japan at its lowest since early February. Japanese markets were closed for a public holiday.
The virus has now killed 2,592 people in China, which has reported 77,150 cases, and spread to some 28 other countries and territories, with a death toll outside of China around two dozen, according to a Reuters tally.
Iran, which announced its first infections last week, said it had confirmed 43 cases and eight deaths, with most of the infections in the holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.