Stock markets slide as coronavirus fears spread

Stock markets slide as coronavirus fears spread

Stock markets fell Monday, as concern about a new strain of coronavirus emanating from China spread around the world, infecting major indexes with fears that the contagion could leave the global economy reeling.

The virus, which has so far infected at least 2,700 people and killed 81, seems to have emerged from a seafood market in Wuhan, China, before spreading around the world. Canada confirmed its second presumptive case of the virus on Monday morning, in the wife of the man who was the first such case, who is currently in isolation at Sunnybrook Hospital in Toronto.

The city’s stock market is not immune to fears over the potential impact of the virus as the S&P/TSX composite index was down 122 points at 17,444, a decline of almost one per cent. That was the biggest one-day decline on the TSX since October.

Companies related to travel and tourism were among the hardest hit, with Air Canada shares down more than five per cent to $44.81. Air Canada shares have lost ground for five days in a row, a timeline that began when the first cases outside China were confirmed.

“Entering the new trading week, investors appear to be reading this as a still-worsening situation with uncertainty over its impact on business growing,” said Colin Cieszynski, chief market strategist with SIA Wealth Management in Toronto.

U.S. stock markets fared even worse, as the Dow Jones industrial average was down 455 points or 1.5 per cent to 28,535, while the broader S&P 500 index was down 52 points or about 1.5 per cent. The tech heavy Nasdaq composite was down 175 points or almost two per cent.

Travel and tourism names were especially hard hit. Las Vegas-based gaming company Wynn Resorts, which has a large presence in the Chinese gambling hotbed of Macau, was off by almost nine per cent. Shares in U.S. airlines United and Delta were both down by about four per cent

“Markets hate uncertainty, and the coronavirus is the ultimate uncertainty,” said Alec Young, managing director of global markets research at money management firm FTSE Russell. “With the markets overbought to begin with, this is now a sell first, ask questions later situation.”

Fear gauge jumps

U.S. listed shares in Chinese e-commerce giant Alibaba lost about four per cent to $204 a share.

Wall Street’s fear gauge, the CBOE Volatility index, jumped to its highest since Oct. 10. 

“The coronavirus … will just elevate volatility due to the embedded uncertainty of things,” David Bahnsen, chief investment officer of The Bahnsen Group, wrote in a client note.

“The Dow is up a stunning 3,000 points in just over three months — it hardly needs an excuse to see volatility elevated.”

The Canadian dollar was down about a quarter of a cent to 75.83 US nearing midday. The loonie was mostly dragged lower because of slumping oil prices, which were themselves dragged down because of fears that the coronavirus will eat into demand for oil as the economy slows. 

West Texas Intermediate lost  $1.30 a barrel to $52.90. WTI has fallen every day since the virus first gained global attention last week, and the price of oil is now at its lowest level since October.

SOURCE : CBC NEWS

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