By Herbert Lash
NEW YORK (Reuters) – Global stock markets plunged and the dollar tumbled Thursday as the coronavirus spread rapidly 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 in the country.
HSBC in London has sent more than 100 employees home and UniCredit in Italy has said the same thing to some employees, while companies have started to issue profit warnings. Southwest Airlines Co said it expects up to $ 300 million in impact on first quarter operating revenues.
In Britain, the regional airline Flybe has collapsed, making it the first major victim of the epidemic industry, and the broadcaster ITV fell 12.0% after warning that the advertising revenues for April could fall by around 10% as travel agencies postpone 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 last year’s 2.6% expansion, said the Washington-based financial industry association. The pandemic has spread to 80 countries and has killed more than 3,000 people worldwide.
In Wuhan, the epicenter of the epidemic in China, an expert from the country’s top panel fighting the disease said the city will likely see new infections drop to zero by the end of March. The total number of cases in China has increased to 80,409.
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 stocks 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 House of Representatives of the United States of a draft $ 8.3 billion funding law to fight the coronavirus. The Senate passed the law on Thursday.
The MSCI global equity index lost 1.89%, while emerging market stocks were little changed.
The pan-European STOXX 600 index lost 1.43%.
On Wall Street, the Dow Jones Industrial Average fell 969.58 points, or 3.58%, to 26,121.28. The S&P 500 lost 106.18 points, or 3.39%, to 3,023.94 and the Nasdaq Composite lost 279.49 points, or 3.1%, to 8,738.60.
The S&P 500 benchmark closed 10.7% lower than its highest closing history on February 19.
Dollar index slipped to eight-week low as traders bet the US Federal Reserve would cut interest rates further, and gold prices rose about 1.5% to reach its highest level in over a week.
On Tuesday, the Fed cut rates by half a percentage point. Money markets are forecasting a further 25d basis point decline at the next Fed meeting in two weeks and a 50 basis point decline by April.
The dollar index fell 0.826%, the euro up 0.89% to $ 1.1233, a peak in 2020.
The Japanese yen strengthened 1.38% against the greenback to 106.09 for the dollar.
US Treasuries rallied as investors worried about the economic implications of the increase in quarantines.
Corporate mergers could drop 25% this year as leaders worry about the coronavirus and the impact of this year’s US elections, said Blair Effron, co-founder of senior M&A advisor Centerview Partners
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 fairly quickly in 2021,” he said. consideration that investors should take into account and don’t panic.
The 10-year benchmark notes increased in price to depress their yield to 0.912%.
Oil prices fell slightly, but losses were limited as the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production further 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, David Gregorio and Jonathan Oatis)
