Markets battered as virus panic takes toll

ASIAN markets spiralled downwards yesterday, tracking a collapse in New York and Europe as the coronavirus spread rapidly around the world with the WHO warning the deadly epidemic was now at a “decisive point”.

Tokyo and Jakarta were hammered more than 4 per cent, while Shanghai, Sydney, Seoul and Bangkok tanked more than 3 per cent each.

The casualties have put equities around the world on course to record their worst week since the global financial crisis more than a decade ago as investors run to the hills on fears the virus will smash the global economy.

And while the panic has already caused a bloodbath on trading floors, there are warnings there could be worse to come.

The Dow suffered its worst points loss on record, shedding almost 1200 points, while its 4.4 per cent drop marked the worst performance in two years. The S&P 500 and Nasdaq also tanked more than 4 per cent, with London, Frankfurt and Paris all posting losses of more than 3 per cent.

The VIX “fear” index is now at its highest level since 2011, which was during the European debt crisis.

President Donald Trump blamed the market plunge on the media coverage of the coronavirus and worries about Democrats winning the White House race. The heavy selling came as authorities in California said they were monitoring some 8400 people for COVID-19 after officials confirmed a woman had contracted it without travelling to any of the outbreak-hit regions.

“Even though the market is pricing in the fear of economic issues and disease hitting the US, we haven’t actually seen the emergence of clusters” in the US, Steve Englander of Standard Chartered said.

“Once that happens we will see another sell-off.”

After Thursday’s battering, Asia picked up the baton. Tokyo and Jakarta both tanked 4.2 per cent, Shanghai shed 3.4 per cent, while Seoul and Sydney were 3.1 per cent off.

Hong Kong went into lunch 2.5 per cent lower, while Singapore also dropped 2.5 per cent and Bangkok lost 3.7 per cent. Wellington, Mumbai and Manila all lost just under 2 per cent. The rush to safety has also seen the dollar surge against most higher-yielding, riskier currencies, with the New Zealand dollar, the South African rand and the Russian rouble all more than 1 per cent lower.

Australia’s dollar, the Indonesian rupiah and the Indian rupee were also sharply down.