The coronavirus isn’t a pandemic--yet, but market fears are knocking on the door of epidemic panic, nonetheless, with the Dow opening Monday morning nearly 1,000 points lower as investors ran for safe haven assets instead. Monday’s open saw the third-largest one-day point drop in three years in the 30-stock average.
The down opened 975 points down, while the S&P 500 was down 2.3%, and Nasdaq-100 was down 4%. Fear also took down bond yields and oil prices.
Why the sudden spook even as everyone knew the coronavirus was devastating China? It’s what happened over the weekend, which produced some numbers that make investors blink--twice.
As of Monday, the world was looking at over 79,000 cases of infection, with a death toll standing at 2,620. Of those, 27 deaths were outside of China--up from 5 deaths outside China a week ago.
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“The number of confirmed coronavirus cases outside of China continued to multiply over the weekend, sending shivers across financial markets as investors were forced to reassess their view that the impact of the outbreak will likely be short-lived,” said Raffi Boyadjian, senior investment analyst at XM, in a note published by MarketWatch.
Where It’s Worst Outside China
South Korea added 163 more cases in just the past 24 or so hours, bringing the total of infected up to 763 by some counts and more than 800 by others, with 8 confirmed dead from the virus. The pace of infection here has been worrying, with only 28 cases as of February 14th.
That has prompted Hong Kong to ban travellers from South Korea, sending another message of doom to the markets.
In Iran, some reports said 50 people had so far died from the coronavirus this month in the city of Qom. That news sent shockwaves through the markets because it overlapped with information from Iranian health officials just prior to that saying only 12 deaths had been confirmed out of 47 cases of infection. This also followed squabbling among official reports, with one health official rejecting claims that 50 people had died from the coronavirus.
In Europe, it’s Italy that’s reeling the most, with 152 cases confirmed as of Sunday, making this the worst-hit venue outside of Asia. Again, it’s the rate of infection that is troubling, considering that only 10 days ago, the number of confirmed cases here was three.
On Monday, Italian officials confirmed that a sixth infected person had died.
WHO director-general Tedros Adhanom Ghebreyesus told reporters at a press conference in Geneva that even though cases in China appear to have slowed, the “sudden increase in new cases” outside of China is “deeply concerning.”
In the meantime, the nearly 1,000 points the Dow lost this morning is equivalent to all the gains it’s made this year, as it gives up the ghost over the coronavirus.
By Michael Kern for Safehaven.com
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