World markets tumble as fears over virus outbreak spread

AP – Shares tumbled in Europe and Asia yesterday as the impact of the virus outbreak in China expanded to include flight cancellations and other wider precautions to help stop its spread.

Taiwan’s benchmark dived 5.8 per cent as its market reopened after the Lunar New Year. Shares fell in most other markets, with the CAC 40 in Paris dropping 1.1 per cent to 5,890.00 and Germany’s DAX shedding one per cent to 13,215.90. In Britain, the FTSE 100 declined 0.9 per cent to 7,415.93.

The declines looked likely to carry over into the United States (US) trading. The future contract for the S&P 500 lost 0.7 per cent, as did the future for the Dow.

The death toll from the virus rose to 170, with 7,711 people in China and elsewhere confirmed infected, as foreign evacuees from the worst-hit region in central China began returning home under close observation.

After world health officials have expressed “great concern” that the disease is starting to spread between people outside of China, Japan’s Nikkei 225 index sank 1.7 per cent to 22,977.75, while Hong Kong’s Hang Seng index skidded 2.6 per cent to 26,449.13. In Australia, the S&P ASX/200 declined 0.3 per cent to 7,008.40. South Korea’s Kospi lost 1.7 per cent to 2,148.00.

Shares also retreated in India and Southeast Asia. Mainland Chinese markets remained closed for the Lunar New Year holiday.

A woman walks past a bank electronic board showing the Hong Kong share index at Hong Kong Stock Exchange yesterday. PHOTO: AP

“With equity markets pumped to juicy levels by the relentless flow of cheap central bank money around the world, unexpected Wuhan-like events leave them acutely vulnerable to potentially aggressive corrections,” Jeffrey Halley of Oanda said in a commentary.

In other news, South Korea’s Samsung Electronics Co said its operating profit for the last quarter fell 33.7 per cent from a year earlier. But it predicted earnings will improve in 2020, driven by a gradually stabilising computer chip market and increasing 5G smartphone sales.

Samsung, the world’s biggest producer of smartphones and semic-onductors, has suffered a sharp drop in profit over the past year with an industry-wide glut forcing chip-makers to slash prices to clear out inventory.

Overnight, stocks lost momentum on Wall Street as investors tuned in to a news conference by Federal Reserve Chairman Jerome Powell.

Speaking to reporters on Wednesday afternoon, Powell acknowledged that there’s a risk the outbreak could slow the global economy. But stocks barely budged after the Fed announced would leave its benchmark interest rate unchanged at a low level. The move, which was widely expected, reflects the central bank’s mostly positive view of the US economy.

Last year, the Fed cut its benchmark interest rate three times after having raised it four times in 2018. Powell credits those rate cuts with revitalising the housing market, which had stumbled early last year, and offsetting some of the drag from US President Donald Trump’s trade war with China.

Overnight, bond prices rose. The yield on the 10-year Treasury fell to 1.56 per cent from 1.64 per cent late on Tuesday.

In energy trading, benchmark crude oil fell gave up 96 cents to USD52.37 per barrel in electronic trading on the New York Mercantile Exchange. It lost 15 cents to settle at USD53.33 a barrel on Wednesday.

Brent crude oil, the international standard, declined USD1.06 cents to USD57.85 per barrel. It rose 30 cents to close at USD59.81 a barrel overnight.

Gold rose USD11.60 cents to USD1,582.00 per ounce. Silver rose 24 cents to USD17.73 per ounce and copper fell three cents to USD2.55 per pound.

The dollar fell to JPY108.83 from JPY108.98 yen on Wednesday. The euro strengthened to USD1.1019 from USD1.1008.