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Stock markets worldwide tumble as coronavirus spreads

Global stock markets plummeted into the red with news of the spread of the coronavirus epidemic outside China, giving rise to fears of major macroeconomic impacts.

The Tokyo Stock Exchange opened Tuesday’s session with a drop of over 4% for the Nikkei Stock Index that fluctuated around this level during initial transactions. The expanded Topix index dropped by 3.81%.

Chinese financial centres also reflected the decline on Tuesday, but less markedly: the Shanghai Composite Index lost 1.62% while Shenzhen’s went down by 2.09% and Hong Kong’s Hang Seng by 0.37%.

On Wall Street, the Dow Jones went through its worst session in more than two years, plummeting by 3.56% with the Nasdaq falling by 3.71% and the S&P 500 by 3.35%.

European markets closed with losses of between 3% and over 5%. The Paris Bourse notably fell by 3.94%, the London index by 3.34%, Frankfurt by 4.01%, Milan by 5.43%, Zurich by 3.58% and Madrid by 4.07%. The euro zone’s EuroStoxx 50 index sank by 4.01%.

While share values plunged, primarily those in sectors doing business with China (raw materials, automobile, tourism and luxury goods), investors have retreated to safer ground by putting their money in state bonds and gold.

Reaching a new seven-year high in the morning of 1,689.31 dollars, the price of an ounce of gold had increased in value by 1.1% at about 9.45 pm GMT, standing at 1,660.84 dollars.

“The market is concerned that the increasing number of cases outside China is becoming a global pandemic likely to have significant macroeconomic repercussions,” Daniel Larrouturou, shares manager at Dôm Finance, commented to AFP.

“While we had the impression that the epidemic was confined to China, there was not so much cause for concern. Now that cases are multiplying outside China, in South Korea, Iran and now Italy, the markets are re-evaluating the possible macroeconomic impacts,” he concluded.

Two months after the appearance of the new coronavirus in the centre of China, the epidemic speeded up its spread across the globe on Monday with notably large increases in the number of victims in South Korea and Iran, which respectively have the largest number of cases of infection and fatalities outside China.

The Brussels Times