Spread of Coronavirus Fuels Financial Upheaval, as Nerves Fray Over Blowout Potential
Feb. 24, 2020 (EIRNS)--Global markets plummeted this morning in response to the spread of the novel coronavirus, COVID-19, to parts of Europe and the Middle East. There is great nervousness over the broader implications for the global financial system, should the virus become a global pandemic. Perhaps even more deadly, although still largely unrecognized or discussed, is the devastating impact that battling the virus could have on the global physical economy, and its supply chains.
The Dow Jones tanked by over 1,000 points, or 3.1% this morning, and although it recovered slightly later in the day, ended with a 3.5% fall. The S&P 500 ended down 3.3%; Nasdaq 3.7%. Most European and Asia markets were down this morning more than 3%; the Borsa Italiana in Milan fell 4.3%. Oil prices also dropped, as did futures markets. South Korea's market fell 4%, and Australia's by more than 2%.
Brent crude, the global oil benchmark, dropped more than 4% to $55.60 a barrel--its biggest decline in almost five months.
U.S. Treasury yields also tumbled this morning. A jittery Reuters pointed to fears that "the outbreak could do far more economic damage than earlier predicted." Investors quickly began to dump shares to move into bonds, "perceiving a risk that China's coronavirus outbreak will grow into a pandemic, with disruptive and deadly consequences around the world," the Queen's rattled news service intoned.
Airline stocks took a bad hit today as well, CNBC reports, as airlines have had to cut back flights to, from, and within China. Demand for air travel has sharply declined. All U.S. carriers have suspended service to mainland China and Hong Kong, because of the virus.