The biggest tumble in Chinese stocks in more than eight months led global equity markets lower Thursday as concern mounted about a new coronavirus outbreak in China.
Millions of Chinese are preparing to travel for the Lunar New Year which begins on Saturday, increasing the potential for the disease to spread. The cities of Wuhan and Huanggang, representing a total population of about 18 million people, were put on a travel lockdown to prevent the virus from spreading, a public health measure that the World Health Organization called “unprecedented.”
“Ultimately, the coronavirus is a slow-burning but important story for markets that is likely to last for months rather than just a few days,” said TD Securities’ European head of currency strategy, Ned Rumpeltin.
Canada’s main stock index rose slightly on Thursday, despite energy stocks tracking a fall in oil prices on fears of the coronavirus outbreak in China hitting fuel demand.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 21.92 points, or 0.12 per cent, at 17,621.78.
The energy sector dropped 0.6 per cent.
The financials sector rose 0.2 per cent, while the industrials sector gained 0.1 per cent.
Leading the index were Alamos Gold Inc., up 5.1 per cent, NovaGold Resources Inc., up 4.4 per cent, and Maple Leaf Foods Inc., higher by 3.9 per cent.
Lagging shares were Ballard Power Systems Inc., down 10.5 per cent, Alacer Gold Corp., down 6.9 per cent, and Baytex Energy Corp., lower by 6.4 per cent.
On Wall Street, the S&P 500 ended slightly higher and the Nasdaq eked out a record high close on Thursday, helped by a jump in Netflix.
Based on the latest available data, the Dow Jones Industrial Average fell 26.45 points, or 0.09 per cent, to 29,159.82, the S&P 500 gained 3.74 points, or 0.11 per cent, to 3,325.49 and the Nasdaq Composite added 18.71 points, or 0.2 per cent, to 9,402.48.
MSCI’s gauge of stocks across the globe shed 0.50 per cent.
Gold and U.S. Treasuries also rose as investors sought out safer assets. Gold later reversed in Europe as part of a wider fall in metals markets that left copper at a 6-week low and walloped 2 per cent off nickel.
Benchmark 10-year notes last rose 11/32 in price to yield 1.7325 per cent, from 1.771 per cent late on Wednesday.
Deaths in China from the coronavirus rose to 17 on Wednesday, with more than 600 cases confirmed.
“The coronavirus has introduced some caution,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “There is no reason to expect a global pandemic now, but there is some repricing in financial markets.”
The Chinese yuan fell to a two-week low, on course for its worst week since August. The Japanese yen climbed 0.2 per cent to secure a third day of gains as the dollar went flat.
The euro fell to a six-week low and German bond yields dropped to their lowest in two weeks after European Central Bank President Christine Lagarde struck a slightly more dovish tone than some had expected.
U.S. crude slid 3.1 per cent to $54.98, while Brent dropped 2.9 per cent to $61.37.
Reuters