🚀 ProPicks AI Hits +34.9% Return!Read Now

GLOBAL MARKETS-Stocks tumble over China epidemic worries

Published 30/01/2020, 10:10
© Reuters.  GLOBAL MARKETS-Stocks tumble over China epidemic worries
USD/JPY
-
USD/CHF
-
UK100
-
XAU/USD
-
FCHI
-
DE40
-
JP225
-
HK50
-
SHEL
-
GC
-
LCO
-
ESU24
-
US10YT=X
-
TWII
-
STOXX
-
MIAPJ0000PUS
-
MIWD00000PUS
-
DXY
-

* MSCi world index down 0.5%

* Europe's STOXX 600 loses 0.8%

* Virus toll rises, WHO to reconsider declaring emergency

* Economists slash China growth forecasts

* U.S. yield curve inverts as safe-haven assets sought

* BOE rate decision at 1200 GMT, press conference due at

1230 GMT

* World FX rates in 2020 http://tmsnrt.rs/2egbfVh

(Releads, updates price throughout, adds market comment)

By Tom Wilson

LONDON, Jan 30 (Reuters) - Stocks across the world tumbled

on Thursday as the death toll from a virus spreading in China

reached 170, forcing airlines to cut flights and stores to close

as the potential economic hit from the outbreak came into focus.

MSCI world equity index .MIWD00000PUS , which tracks shares

in 49 countries, fell 0.5% as European shares followed Asian

indexes into the red, stoking demand for the perceived security

of safe-haven assets from bonds to gold.

Europe's broad STOXX 600 .STOXX fell 0.9% in early trade,

with indexes in Frankfurt .GDAXI , Paris .FCHI and London

.FTSE lost between 0.7%-1.3%.

Adding to the gloom, disappointing earnings and trading

updates weighed further on blue-chip stocks. Royal Dutch Shell

RDSa.L fell 4.8% after fourth-quarter profit halved to its

lowest in more than three years. U.S. stock futures ESc1 pointed to a negative open on Wall

Street.

The number of confirmed deaths from the virus in China has

climbed to 170 with 7,711 people infected, and more cases are

being reported around the world. Chinese factories have extended holidays, global airlines

cut flights and Sweden's Ikea said it would shut all stores in

China.

One Chinese government economist said the crisis could cut

first quarter growth in the world's No.2 economy by one point to

5% or lower, with the crisis hitting sectors from mining to

luxury goods. Investment banks also started to put figures on what the

damage could be. Citi has said it expects China's 2020 growth to

slow to 5.5%, after previously predicting it to be 5.8%, with

the sharpest slowdown this quarter.

Still, others cautioned that estimates were hard to make.

"The economic impact will be determined by the extent to

which it spreads," said Michael Bell, global market strategist

at J.P. Morgan Asset Management, adding that hard evidence of a

hit to economic data was needed before the impact of the virus

could be judged.

Benchmark U.S. and German government bond yields fell

sharply, with 10-year German bund yields dropping to a

three-month low.

U.S. 10-year Treasuries also fell 3 basis points to 1.5600%,

their lowest since October US10YT=RR . The yield curve - as

measured by the gap between 10-year and three-month note and a

closely watched indicator of looming recession - fell again into

negative territory.

Gold edged 0.3% higher XAU= .

WHO DECISION

The World Health Organisation's Emergency Committee was due

to reconvene later in the day to decide whether the rapid spread

of the virus now constitutes a global emergency. is some concern about tonight's presser by the WHO.

The fear is that they might raise the alarm bells ... so people

are taking money off the table," said Chris Weston, head of

research at Melbourne brokerage Pepperstone.

Earlier, MSCI's broadest index of Asia-Pacific shares

outside Japan .MIAPJ0000PUS fell 2.1% to a seven-week low and

has now dropped for six straight sessions. Indexes in Japan

.N225 and Hong Kong .HSI fell 1.7% and 2.6% respectively.

Taiwan's benchmark index .TWII slumped 5.7% in its first

session since the Lunar New Year break.

Federal Reserve Chairman Jerome Powell acknowledged on

Wednesday the risks from any slowdown in the Chinese economy but

said it was too early to judge the impact on the United

States.

The Fed held interest rates steady on Wednesday at its first

policy meeting of the year, with Powell pointing to continued

moderate economic growth and a "strong" job market. In Europe, the pound GBP=D3 hovered around a one-week low

hit on Wednesday ahead of Bank of England Governor Mark Carney's

final policy vote, where the central bank appears close to

cutting rates for the first time in more than three years.

Financial markets are pricing in a 45% chance that the BOE

would cut rates to 0.5% from 0.75%. Economists polled by Reuters

two weeks ago predicted a 6-3 vote to keep rates on hold.

Elsewhere in currencies, a risk-averse mood ruled, with

exposed Asian currencies and commodities sensitive to Chinese

demand extending losses as economists made deep cuts to their

China growth forecasts.

The Chinese yuan CNH= reversed Wednesday's gains to fall

0.4% to its lowest level since Dec. 30., breaking through the

key level of 7 against the dollar.

The Australian dollar AUD=D3 and the kiwi dollar NZD=D3

both lost 0.3%.

The Japanese yen JPY= rose 0.2% against the dollar, while

the Swiss franc CHF= , also seen as a safe haven, also gained.

The dollar against a basket of six major currencies .DXY

was flat.

Oil prices, a barometer of the expected impact of the virus

on the world's economy, resumed their slide. Brent LCOc1 was

down 95 cents, or 1.8%, at $58.71 a barrel shortly after 0800

GMT. and has dropped 10% since Jan 20. O/R

For Reuters Live Markets blog on European and UK stock

markets, please click on: LIVE/

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.