US stocks tumble amid China virus concerns; gold rises

Bloomberg

US equity futures tumbled alongside stocks in Europe and Asia on Monday as concerns mounted about the ability of authorities to keep the coronavirus from spreading further beyond China. Havens including Treasuries and gold jumped.
Contracts on the three main US stock benchmarks were all down more than 2%, with those on the S&P 500 Index pointing to the biggest drop since August.
The yield on 10-year Treasuries sank to its lowest since 2016.
South Korea’s benchmark dropped 3.9%, leading declines across Asia, though Japan’s markets were shut for a holiday.
Spot gold approached $1,700, while Brent crude oil tumbled almost 4%.
The risk-off mood was triggered by multiple outbreaks of the epidemic that’s now spread to more than 30 countries, with South Korea reporting a jump in infections and Italy locking down an area of 50,000 people near Milan. Finance chiefs and central bankers from the largest economies warned that they saw the virus bringing downside risks to global growth.
Risk assets are reeling as governments and companies curb travel to contain a novel pathogen that can be transmitted by people without symptoms. The moves follow on last week’s surge into havens after fresh warnings by companies over the potential impact of the virus on business and global supply chains. Adding to the anxiety on Monday was China announcing an easing of the quarantine of Wuhan, only to retract the statement hours later.
“Until last week it was largely contained in terms of growth of new cases and growth in fatalities to China,” Tim Graf, head of macro strategy at State Street, said in a Bloomberg TV interview. “And there was also a belief that whatever policy response might come, it would be forceful enough that you would see a V- or U-shaped recovery.
But perhaps we’re starting to see that might be a little more complicated.”
Elsewhere, Italian bonds dropped on concern that the spread of the coronavirus may push the economy into a recession. The Australian dollar chalked up a fresh 11-year low and the offshore yuan held most of last week’s decline.
Earnings keep rolling in from companies including: Peugeot SA on Wednesday; Baidu Inc, Best Buy Co, Occidental Petroleum Corp and Dell Technologies Inc on Thursday; and London Stock Exchange Group Plc on Friday.
The Democratic presidential debate in South Carolina is on Tuesday.
The Bank of Korea announces its policy decision on Thursday.
US jobless claims, GDP and durable goods data are out on Thursday. Japan industrial production, jobs, and retail sales figures are due on Friday.
Futures on the S&P 500 Index sank 2.7% in London. Nasdaq 100 Index futures tumbled 3.3%. The Stoxx Europe 600 Index dropped 3.7%. South Korea’s Kospi index sank 3.9%. The MSCI Asia Pacific Index declined 1.3%.
The Bloomberg Dollar Spot Index climbed 0.4% to 1,219.24. The euro declined 0.3% to $1.0817. The British pound dipped 0.5% to $1.29. The Japanese yen strengthened 0.3% to 111.30 per dollar.
The yield on 10-year Treasuries tumbled eight basis points to 1.39%. The yield on two-year Treasuries sank eight basis points to 1.27%. Germany’s 10-year yield decreased six basis points to -0.49%. Britain’s 10-year yield dipped five basis points to 0.526%.
West Texas Intermediate crude decreased 3.6% to $51.47 a barrel.
Gold strengthened 2.6% to $1,686.96 an ounce.