European shares suffer worst day since 2016 as virus spreads

Europe’s share markets suffered their biggest slump since mid2016 on Monday, as a jump in coronavirus cases in Italy, South Korea, Japan and Iran sent investors scrambling to the security of gold and government bonds.

Milan’s stock market plunged over 4.5% after a spike in cases of the virus left parts of Italy’s industrial north in virtual lockdown. Frankfurt and Paris both fell more than 3.5% and London’s FTSE dropped 3.3%, wiping at least $400 billion off the region’s market value in a few hours.

The flight to safety was just as resounding. Gold surged 2.5% to a seven-year high of $1,680 an ounce, taking its gains for the year past 10%. Bonds rallied, too. Tenyear U.S. Treasury yields dropped below 1.4% for the first time since July 2016. The 30-year Treasury touched a record low at just under 1.85% and German yields dropped to -0.475%, their lowest in more than four months.

In Asia, South Korea’s KOSPI slumped 3.9% after the government declared a high alert. The number of cases rose to 763 and deaths to seven. Japanese markets were closed, but Australia’s benchmark index slid 2.25% and New Zealand fell about 1.8%.. China’s blue-chip CSI300 closed down 0.4%, taking MSCI’s broadest index of Asia-Pacific shares outside Japan to its lowest since early February.

Iran, which announced its first infections last week, said it had confirmed 43 cases and eight deaths, with most of the cases in the holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.

In commodity markets, Brent crude fell 3.5%, or $2.1, to $56.35 a barrel. U.S. crude dropped 3%, or $1.64, to $51.74 a barrel. Among the main industrial metals, copper fell 1.4% and zinc was down 2.5%.