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By Herbert Lash
NEW YORK (Reuters) – Global stock markets plunged and the dollar slipped Thursday as the coronavirus quickly spread outside of China, prompting Britain to prepare for a significant increase in cases and the France to say that it seemed “inevitable” that the epidemic would become an epidemic.
HSBC in London has sent more than 100 employees home, and UniCredit in Italy has told some employees to go home while the companies begin to issue profit warnings. Southwest Airlines Co said it expects up to $ 300 million in impact on first quarter operating revenues.
In another sign of significant damage to the travel sector, the British regional airline Flybe collapsed, the industry’s first major victim of the epidemic.
British commercial broadcaster ITV fell 12.0% after warning that advertising revenue for April could drop by around 10% as travel agencies postponed their campaigns.
Three other people died from coronavirus infection in France, bringing the total to seven, and Britain recorded its first death from the pathogen. The number of people in New York State who tested positive for the virus doubled to 22 following a significant increase in tests.
“I thought 2020 would be the election year, but it turns out to be the year of the virus, and it will dominate everything in the global economy this year,” said David Kelly, global chief strategist at JPMorgan Asset Management.
The Institute of International Finance downgraded its forecasts for the U.S. and Chinese economies and warned that global growth may be the weakest since the financial crisis.
Global growth in 2020 could approach 1%, well below the 2.6% expansion in 2019, said the Washington-based financial industry association. The pandemic is raging in 80 countries and has killed more than 3,000 people worldwide.
Mainland China had 139 new confirmed cases on Wednesday, the National Health Commission (NHC) announced, bringing the total number of cases to 80,409. Wuhan reported a faster increase in new confirmed cases, but a top panel expert from the country on disease control said the epicenter of the epidemic will likely see new infections drop to zero by the end of March.
In Italy, where the virus has hit Europe the hardest, the Civil Protection Agency said the death toll rose from 41 on Wednesday to 148, with the contagion showing no signs of slowing down.
US stocks fell sharply and European stock markets broke a three-day winning streak as the epidemic’s progress clouded mood. A day earlier, Wall Street had welcomed the solid performance of former Vice President Joe Biden in the Democratic nomination campaign and the approval by the US House of Representatives of a funding bill. $ 8.3 billion to fight the coronavirus.
The MSCI global equity index lost 2.30%, while emerging market equities lost 0.19%.
The pan-European STOXX 600 index lost 1.43%.
On Wall Street, the Dow Jones Industrial Average fell 1,088.83 points, or 4.02%, to 26,002.03. The S&P 500 lost 123.64 points, or 3.95%, to 3,006.48, and the Nasdaq Composite lost 321.79 points, or 3.57%, to 8,696.30.
The dollar slipped to an eight-week low as traders bet that the Federal Reserve would further lower interest rates, and the price of gold climbed about 1.5% to its highest level in more than a week.
On Tuesday, the Fed cut rates by half a percentage point. Money markets expect a further 25 basis point decline at the next Fed meeting in March and a 50 basis point decline in April.
The dollar index fell 0.601%, the euro up 0.62% to $ 1.1203.
The Japanese yen strengthened 1.16% against the greenback to 106.31 for the dollar.
US Treasuries rallied on Thursday as investors worried about the economic implications of the increase in quarantines.
American economic data still does not show the impact of the coronavirus. The number of Americans filing for unemployment benefits declined last week. The strength of the labor market was underscored by other data showing that the job cuts expected by employers based in the United States fell sharply in February.
The impact of the epidemic does not appear in the data, but the storm is approaching, said Kelly.
“We have not yet seen the eye wall of this storm. But it will gradually fade and as it will, the world economy will recover relatively quickly in 2021,” he said. consideration that investors should take into account and not panic. .
The 10-year benchmark notes increased in price to depress their yield to 0.9184%.
Oil prices fell slightly, but losses were limited, as the Organization of the Petroleum Exporting Countries agreed on larger production cuts to support prices.
Brent crude was $ 1.14 to $ 49.99 a barrel. The West Texas Intermediate fell 88 cents to $ 45.90.
US gold futures stabilized 1.5% to $ 1,668 an ounce.
(Reporting by Herbert Lash; Editing by Chris Reese and David Gregorio)
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