World shares fall to lowest in two weeks on virus worries
Demand for safe-haven assets rise as worries grow over virus' economic impact
LONDON: World shares fell to their lowest in two weeks yesterday as worries grew about the economic impact of China's spreading coronavirus, with demand spiking for safe-haven assets such as Japanese yen and Treasury notes.
The death toll from the coronavirus outbreak in China rose to 81 and the virus spread to more than 10 countries, including France, Japan and the United States. Some health experts questioned whether China can contain the epidemic.
The MSCI All-Country World Index, which tracks shares across 47 countries, was down 0.42 per cent to its lowest since Jan 13.
In Europe, stock markets slumped at the start of trading, tracking their counterparts in Asia. The pan-European STOXX 600 index fell 1.4 per cent to its lowest level since Jan 14.
"The coronavirus is an economic and financial shock. The extent of that shock still needs to be assessed, but it could provide the spark for an arguably long-overdue adjustment in the capital markets," Mr Marc Chandler, chief market strategist at Bannockburn Securities, told clients.
In Asia, Japan's Nikkei average slid 2 per cent, the biggest one-day fall in five months. A Tokyo-listed China proxy, ChinaAMC CSI 300 index ETF, fell 2.2 per cent. Many markets in Asia were closed for the Chinese New Year holiday.
US S&P 500 mini futures were last down 0.9 per cent, after falling 1.3 per cent in early Asian trade.
"With most Asian markets closed, fast-money investors are buying risk-off hedges like Treasuries and selling the Nikkei," said portfolio manager Masahiko Loo at Alliance Bernstein.
"I think this would continue this week, until China markets resume trading next week and the coronavirus outbreak subsides."
All three major Wall Street indexes closed lower on Friday, with the S&P 500 seeing its biggest one-day percentage drop in over three months.
The S&P 500 lost 0.9 per cent, the Dow Jones Industrial Average 0.6 per cent and the Nasdaq Composite 0.9 per cent after the Centres for Disease Control and Prevention confirmed another case of the virus on US soil.
In the currency market, the Japanese yen strengthened as much as 0.5 per cent to 108.73 yen (S$1.35) per dollar, its 21/2-week high.
The euro last stood at €1.1031(S$1.65) to the dollar, up from its eight-week low of €1.1019 on Friday.
The offshore yuan dropped more than 0.5 per cent to 6.9776 yuan ( S$1.36) against the dollar, its weakest since Jan 6. - REUTERS