200225 NYSE
Traders work during the closing bell at the New York Stock Exchange (NYSE) on February 24, 2020 at Wall Street in New York City. Image Credit: AFP

New York: Global stocks were hammered Monday and gold prices soared on safe-haven buying as fears mounted that the new coronavirus would derail economic growth.

Equity bourses were a sea of red, including in Milan and Seoul — two countries outside of China that have suffered outbreaks of the virus in recent days.

In the US, the Dow plunged more than 1,000 points in its worst session in more than two years.

“The market reaction is a classic ‘sell now and ask questions later,’” said Quincy Krosby, chief market strategist for Prudential Financial, who said the selloff reflects fears the virus will dent earnings growth.

Read more

Oil prices tumbled on worries about demand, while gold prices on the London Bullion Market spiked to $1,689.31 per-ounce, a level last seen in January 2013, before easing back somewhat as investors sought the precious metal as a safety measure amid the market turbulence.

Investors have been unsettled by the spread of the disease, analysts said.

Italy reported its seventh death from the coronavirus, but officials called for calm and reported the number of infections slowing after a spike over the weekend.

South Korea’s K-league postponed the start of the new football season as a leap in cases wrought havoc across its sporting calendar.

Meanwhile, the World Health Organization said the new coronavirus epidemic had “peaked” in China but warned that a surge in cases elsewhere was “deeply concerning” and all countries should prepare for a “potential pandemic.”

US President Donald Trump on Twitter said the virus “is very much under control in the USA,” adding that “stock markets are starting to look very good to me!”

Trump’s comments aimed to encourage bargain-hunting after major US indices ended down more than three per cent, with all 11 industrial sectors tumbling.

Earlier, European stock markets were a sea of red, with Frankfurt and Madrid falling by 4.0 per cent, Paris shedding 3.9 per cent and London losing 3.3 per cent.

“The root of the problem is this: there is burgeoning fear that the shutdown effect that has hit China’s economy is going to take over elsewhere, dealing another blow to global growth, and earnings growth prospects,” commented Patrick O’Hare at Briefing.com.

Travel and tourism linked firms were particularly vulnerable, with Sydney-listed airline Qantas plunging more than seven per cent, and Air China off by nearly six per cent in Hong Kong.

An exception was Gilead Sciences, which surged 4.6 per cent following upbeat comments from a World Health Organization official about the company’s remdesivir, an experimental drug to treat the virus.