By Herbert Lash
NEW YORK (Reuters) – Global equity markets slumped on Friday as the fast-spreading coronavirus drove investors into safe havens, with gold hitting a fresh seven-year high and the yield on the 30-year U.S. Treasury bond sliding to an all-time low.
The virus spread to hundreds of people in Chinese prisons, contributing to a jump in reported cases beyond the epicenter in Hubei province, including 100 more in South Korea.
Cases of the disease have turned up in 26 countries and territories outside mainland China, killing 11 people, according to a Reuters tally. According to data, mainland China had 892 new confirmed cases and 118 deaths, with most of those in Hubei’s provincial capital Wuhan, which remains under virtual lockdown.
The CBOE market volatility index <.VIX>, the market’s “fear gauge,” rose just shy of 10% in the biggest single-day jump since late January. The VIX closed at its highest level since Feb. 3.
Crude oil prices slid about 1% and the U.S. dollar fell across the board.
Heading into the weekend, investors decided to book profits on the possibility of more coronavirus news, said JJ Kinahan, chief market strategist at TD Ameritrade.
The coronavirus has become this year’s worry, much as the U.S.-China trade war was in 2019, he said.
MSCI’s gauge of stocks across the globe <.MIWD00000PUS> shed 0.75% and emerging market stocks <.MSCIEF> lost 1.05%.
The pan-European STOXX 600 index <.STOXX> lost 0.49% as shares fell from record highs on Thursday. A raft of disappointing earnings added to fears about the global impact of the coronavirus outbreak.
Auto stocks <.SXAP> led losses in Europe, down 1.9% in their worst session in four weeks. The sector is the worst performing among major regional sectors, off more than 8% so far this year.
On Wall Street, the Dow Jones Industrial Average <.DJI> fell 227.57 points, or 0.78%, to 28,992.41. The S&P 500 <.SPX> lost 35.48 points, or 1.05%, to 3,337.75 and the Nasdaq Composite <.IXIC> dropped 174.38 points, or 1.79%, to 9,576.59.
U.S. stocks were beaten down by concerns about the virus and after data showed American business activity stalled in February, signaling a contraction for the first time since 2016.
U.S. chipmakers fell sharply. The Philadelphia Semiconductor Index <.SOX> slid 2.99%, on track for its worst one-day drop since Jan 31, when fears about the health crisis pummeled markets.
A flash reading of the IHS Markit services sector Purchasing Managers’ Index dropped to its lowest level since October 2013. The manufacturing sector also clocked its lowest reading since August.
Heavyweights Microsoft Corp <MSFT.O>, Amazon.com Inc <AMZN.O> and Apple Inc <AAPL.O> led U.S. stocks lower for a second straight day.
The dollar index <=USD> fell 0.532%, with the euro <EURO=> up 0.6% to $1.0848.
The Japanese yen <JPY=> strengthened 0.47% versus the greenback at 111.62 per dollar.
While markets had largely brushed aside fears of long-term economic damage from the virus, a steady drip of new cases in countries beyond China has kept concerns alive.
Yields on the benchmark 10-year U.S. Treasury note fell below 1.5% for the first time since early September, while the 30-year long bond <US30YT=RR> fell to 1.886%, an all-time low.
The 10-year note <US10YT=RR> rose 17/32 in price to push its yield down to 1.4696%.
Ten-year German government bond yields fell to a four-month low earlier at -0.464% <DE10YT=RR>, but rebounded after the IHS Markit Composite Flash PMI for the euro zone showed business activity accelerated more than expected in February.
Yields closed at -0.43%
Oil prices slid as investors fretted about crude demand being pinched by the impact of the coronavirus outbreak, while leading producers appeared to be in no rush to curb output.
Brent crude <LCOc1> settled down 81 cents at $58.50 a barrel. U.S. crude <CLc1> dropped 50 cents to settle at $53.38 a barrel.
U.S. gold futures <GCcv1> settled up 1.7% at $1,648.80 an ounce.
Spot gold <XAU=> rose 3.7% for the week, marking its biggest weekly gain since early August.
(GRAPHIC – Stocks vs reported cornonavirus cases: https://fingfx.thomsonreuters.com/gfx/mkt/13/2376/2344/Pasted%20Image.jpg)
(Reporting by Herb Lash; Editing by Dan Grebler and Jonathan Oatis)