Markets fall as virus cases spike
Financial markets plunged yesterday as the spread of the coronavirus that has ravaged China threatens economic havoc on a global scale.
The Dow Jones industrial average sank by more than 1000 points, or 3.6 per cent, to close at 27,961.01 after Wall Street interpreted new disease clusters in South Korea, Italy and Iran as a sign that the respiratory illness has outraced confinement efforts. The technology-heavy Nasdaq index fell by more than 3.7 per cent.
Factories around the world are grappling with parts shortages as their Chinese suppliers struggle to resume normal operations. With global economic engines sputtering, the Federal Reserve and other central banks face calls for emergency help.
But central bank chiefs may be ill equipped to battle the economic consequences of the flu-like illness, which has prevented many Chinese workers from returning to their assembly lines and kept consumers at home instead of shopping.
Interest rates are in negative territory in Europe and at nearhistoric lows in the United States. And while making credit less expensive – the Fed’s standard tool for combating a slump – may offset some of the financial upheaval, it can do little to remedy broken supply chains or ease individuals’ fears of contagion.
‘‘There’s just growing angst in the investor community that this thing is more serious than we realised,’’ said Chris Meekins, an analyst with Raymond James and a former Trump administration preparedness official.
‘‘When you’re worried about catching a disease, you’re not going to go out to dinner; you’re not going to go to the movies or sporting events or concerts. The only question is how widespread this becomes.’’
The world’s 500 richest people lost a combined $139 billion
(NZ$219b) as markets buckled amid fears that the coronavirus will hammer the global economy.
It’s the biggest wealth drop for the group since the Bloomberg Billionaires Index began tracking that figure in October 2016.
Bernard Arnault, chairman of luxury-goods maker LVMH, and Amazon.com Inc. founder Jeff Bezos led the declines, with each losing more than $4.8b. Amancio Ortega, chief executive officer of Zara parent Inditex SA, tumbled
$4b, and the fortunes of everyone else in the top 10 slid by at least
$2.3b.
Yesterday, China reported 508 new cases and another 71 deaths,
68 of them in the central city of Wuhan, where the epidemic was first detected in December. The updates bring mainland China’s totals to 77,658 cases and 2663 deaths.
South Korea now has the second-most cases in the world with 893 and has had a near
15-fold increase in reported infections in a week, as health workers continue to find batches in the southeastern city of Daegu and nearby areas.
Schools were closed in Iran for a second day, and daily sanitising of public buses and the Tehran metro, which is used by some 3 million people, was begun.
In several countries
that reported their first cases yesterday – Iraq, Afghanistan, Kuwait, Bahrain and Oman, the infected patients had links with Iran. Iraq and Afghanistan closed their borders with Iran in an effort to stop the spread.
In Italy, where 229 people have tested positive for the virus and seven have died, police manned checkpoints around a dozen quarantined northern towns as worries grew across the continent.
The surge in cases across Europe suggests that the Covid-19 virus is spreading without symptoms becoming apparent, scientists warned, as a study found that screening at airports would miss most infected travellers.
Dr Simon Clarke, of the University of Reading, said that a rise in cases in Europe and Asia suggested ‘‘that the virus can pass from person to person without symptoms, making it extremely difficult to track, regardless of what health authorities do’’.
Travellers worldwide are being screened for Covid-19. Researchers from Chicago University suggested, however, that this was unlikely to stop its spread. ‘‘Even under best-case assumptions, we estimate that screening will miss more than half of infected people,’’ they said. – Washington Post, AP, The Times