1 Month : From Jan 2020 to Feb 2020
By Joe Wallace
Global stocks fell following a jump in the number of new coronavirus cases in the Chinese province at the epicenter of the outbreak.
Futures tied to the Dow Jones Industrial Average dropped 0.6% a day after all three major U.S. indexes closed at a record. The Stoxx Europe 600 retreated 0.6%, and the Shanghai Composite Index closed down 0.7%.
A nearly 10-fold increase in newly confirmed infections in Hubei raised the prospect of a longer period of economic disruption in China than investors previously anticipated, weighing on stock markets that had climbed for much of the past two weeks.
The number of newly confirmed infections in the province jumped to 14,840 on Wednesday, from 1,638 a day earlier, after the provincial health commission started to count clinically diagnosed cases, on top of people with a positive laboratory test. The death toll in Hubei, where the illness is thought to have originated, climbed by 242.
The rising number of cases has prompted "renewed concern around the dynamics of the coronavirus," said James McCormick, a strategist at NatWest Markets. "Having had several days of relative calm, it's a bit of a wake-up call that this process is probably going to go on for quite some time."
Investors became "a bit complacent" in recent days as the number of new cases appeared to have slowed, helping push equity markets in the U.S. and Europe to all-time highs, Mr. McCormick said.
Although the number of confirmed cases in the U.S. is low, at 14, analysts said disruption to business and travel in China could ripple through the American economy. A drop-off in tourism and slowdown in exports to China could pull down annualized U.S. growth by half a percentage point in the first quarter, according to economists at Goldman Sachs Group.
Before the opening bell in New York, shares in Cisco Systems fell 5.5% after the telecom gear maker said economic uncertainties had delayed investment decisions at some companies, denting its sales growth.
The slide in global stocks was mirrored in commodity markets, where Brent-crude oil futures fell 0.4% to $55.58 a barrel and copper futures slipped 0.4% to $2.59 a pound. The novel coronavirus will lead to the first drop in global oil demand in more than a decade this quarter, the International Energy Agency said in a report.
Haven assets climbed. The yield on 10-year Treasurys, which moves inversely to the price, fell to 1.597%, from 1.62% Wednesday. Gold futures rose 0.4% to $1,577.90 a troy ounce.
"As time goes on, people are realizing more of the telltale signs of the economic impact" of coronavirus, said Cliff Tan, East Asian head of markets research at MUFG.
In one such sign, Chinese auto sales dropped 18% in January to 1.94 million vehicles, according to data from the government-backed China Association of Automobile Manufacturers on Thursday. Car sales typically slide during the Lunar New Year holiday, but Mr. Tan said he expects them to tumble further in February. "How can you buy a car if you can't get to the dealership?" he said.
The U.K. was an outlier in government-bond markets. The yield on 10-year gilts climbed to 0.654% after Chancellor of the Exchequer Sajid Javid stepped down, from 0.583% before reports of his resignation emerged.
The British pound rose 0.5% to $1.3025, weighing on shares in U.K. companies that earn a large portion of their revenue overseas and contributing to a 1.5% decline in the FTSE 100 equity benchmark.
Sterling and gilt yields rose on the basis that "this could mean a stronger hand on the fiscal controls" for Prime Minister Boris Johnon, said John Wraith, rates strategist at UBS Group. "The prospect for more significant fiscal loosening or fiscal stimulus is greater."
Investors have overreacted to Mr. Javid's resignation, according to Mr. Wraith. The departure appeared to be the result of a political power struggle rather than a clash over economic policy, he said.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
February 13, 2020 08:50 ET (13:50 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.