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LONDON)
* Equity markets slump worldwide
* Safe-haven Japanese yen, Treasury notes in demand
* Many Asian markets closed for New Year holiday
By Herbert Lash
NEW YORK, Jan 27 (Reuters) - Stocks markets tumbled
worldwide on Monday and investors worried about the possible
economic impact of the coronavirus drove up the price of
safe-haven assets such as the Japanese yen and government debt.
China's yuan tumbled to a 2020 low and commodity-linked
currencies such as the Australian dollar fell on mounting
concern about the coronavirus. The yen was the main beneficiary,
though its move higher was limited.
Crude prices dropped below $60 a barrel for the first time
in nearly three months on risk aversion, while gold prices
surged 1% to nearly a three-week high.
Benchmark U.S. Treasury yields fell to three-month lows
while the yield on 10-year German bunds, the euro zone
benchmark, fell to its lowest in almost two months.
Key indexes for British, French and German equity markets
slid more than 2%, as did pan-European markets. Stocks on Wall
Street fell more than 1% as investors grew increasingly anxious.
Markets in China, Hong Kong, Taiwan, South Korea, Singapore
and Australia were closed on Monday.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
1.56% to a three-week low, while its emerging market index lost
1.59%.
The broad FTSEurofirst 300 index in Europe .FTEU3 dropped
2.23 percent at 1,619.61 while the pan-European STOXX 600 index
.STOXX lost 2.29%.1,620.23
On Wall Street, the Dow Jones Industrial Average .DJI fell
405.73 points, or 1.4%, to 28,584, the S&P 500 .SPX lost 46.54
points, or 1.41%, to 3,248.93 and the Nasdaq Composite .IXIC
dropped 167.91 points, or 1.8%, to 9,147.00.
U.S. equities were overdue for a correction, said David
Kelly, chief global strategist at JPMorgan Funds in New York.
"We have a slow and steady economy, a giddy and fast market and
eventually those two things have to meet in the middle
somewhere."
The benchmark S&P 500 rose more than 12% from the end of
September to an all-time high last week.
"The market was due for a fall and coronavirus is a perfect
case of an unknown unknown. An increase in uncertainty causes
the market to fall but the real question here does it affect the
global economy?" Kelly said, adding he did not expect it to
significantly change global economic growth or corporate
earnings.
China extended its Lunar New Year holiday and the Shanghai
stock exchange said it will reopen Feb. 3. More big businesses
in China shut down and told staff to work from home in a bid to
contain the disease's spread as the death toll rose to 81.
The Nikkei share average .N225 in Tokyo slumped 2.03%, its
biggest percentage fall since August, with tourism shares hard
The ability of the coronavirus to spread is getting stronger
and infections could continue to rise, China's National Health
Commission said on Sunday. The total number of confirmed cases
in China rose to 2,835. Robert Pavlik, chief investment strategist at SlateStone
Wealth LLC in New York said investors are scared that the virus
could lead to an economic slowdown but at the moment the market
has overreacted.
"The market has been waiting for some sort of sell-off to
develop after a roughly 30% year and for a reason for it to
happen," Pavlik said.
Oil prices fell about 2% and earlier falling more than 3%.
Brent crude LCOc1 slid $1.23 a barrel to $59.46, its
lowest since late October and the biggest intra-day fall since
Jan. 8. U.S. crude CLc1 fell 96 cents to $53.23 a barrel.
U.S. Treasury prices advanced, pushing their yield lower.
Benchmark 10-year Treasury notes US10YT=RR rose 19/32 in
price to yield 1.6149%.
The benchmark 10-year Bund yield was down 5 bps to -0.414%.
In the currency market, the dollar index .DXY rose 0.12%,
with the euro EUR= down 0.1% to $1.1012.
The yen JPY= strengthened 0.31% versus the greenback at
108.96 per dollar.
Spot gold XAU= rose as much as 1.0% to $1,586.425 an
ounce, the highest level since Jan. 8, as the coronavirus
outbreak pushed up demand for the safe-haven metal. GOL
Daily cumulative cases of coronavirus JPG https://tmsnrt.rs/2Rgj92F
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