Global Markets Are on Edge as Coronavirus Spreads - The New York Times

After sharp losses around the world, investors on Tuesday continued to assess the long-term economic effects of the coronavirus epidemic.

The verdict was mixed. Investors abandoned stocks in Asia, while markets in Europe steadied after the previous day’s sell-off. Stock market futures in the United States pointed to an upswing when trading starts on Wall Street.

Investors could be in for a rocky period as the pneumonialike illness spreads, having killed 106 people and sickening more than 4,500 to date. Health officials in the United States are warning that travelers should avoid nonessential trips to China, while global businesses are restricting travel. The Chinese government extended the Lunar New Year holiday, which could disrupt production and hurt the country’s growth.

“The coronavirus is the No. 1 threat to financial markets currently as global investors are becoming jittery on the uncertainty,” said Nigel Green, the founder of the investment group deVere Group.

“This is a worrying and serious situation and investors must be vigilant,” he added.

The concern is that the fallout could create a major shock for markets, even as worries about geopolitics and global trade have eased.

Many Asian stock markets were closed for the Lunar New Year holiday, but those that were open, including Japan’s and South Korea’s, fell and futures trading in China slumped. Money poured into safe-haven assets like gold and pushed up the value of the United States dollar. Most European markets were slightly higher.

Japan’s minister of economic and fiscal policy said on Tuesday that the Chinese outbreak would affect the Japanese tourism industry and warned that it could also hurt exports and corporate profits. Chinese tourists traveling to Japan accounted for 30 percent of all tourists in 2019, he said at a news conference.

“There are concerns over the impact to the Chinese and global economy from the spread of infection in China, transportation disruptions, cancellation of group tours from China and an extension in the Lunar holiday,” said the minister, Yasutoshi Nishimura.

In Tokyo, investors pushed stocks down by 0.6 percent. In Seoul, stocks fell by more than 3 percent. Hong Kong’s stock market will reopen on Wednesday. In China, where authorities have extended the New Year holiday by a week, the major exchanges in Shenzhen and Shanghai said they would remain closed until Feb. 3.

China’s securities regulator on Tuesday called for investors to “rationally and objectively analyze the impact of the epidemic,” and to “adhere to the concept of long-term investment.”

In Europe, London’s FTSE 100 index gained 0.2 percent in midday trading, while the DAX in Frankfurt was 0.1 percent lower.

The price of oil, which tumbled on Monday amid fears that the virus would dampen demand for fuel, drifted slightly lower on Tuesday.

China’s appetite for oil has grown at around 5.5 percent annually, making it an important buyer in the global market. The country has already imposed travel restrictions and any extension could further dampen demand.

“The question isn’t whether coronavirus will depress global oil demand,” wrote Ryan Sweet, head of monetary policy research at Moody’s Analytics. “Rather, the question is by how much.”

Claire Fu and Eimi Yamamitsu contributed research.

2020-01-28 08:04:00Z
https://www.nytimes.com/2020/01/28/business/coronavirus-financial-markets.html