U.S. stocks open more than 3% lower as coronavirus fears grow

Darnell Taylor
February 27, 2020

All three major US indices posted major losses with the Dow Jones Industrial Average down more than 1,000 points at the closing bell.

Share prices worldwide were down due to concerns about the economic impact of the new coronavirus. In Australia, the S&P ASX/200 shed 1.6% to 6,866.60.

Still, the rally had proved resilient up to this point and further declines were not guaranteed but an uptick in coronavirus fears over the weekend seemingly sparked greater risk aversion and were largely to blame for Monday's tragic opening. The Nasdaq fell 3.2 per cent.

The yield on the 10-year Treasury remained near all-time lows Tuesday, trading at 1.377%.

Safe-havens like precious metals saw inflows, with silver up almost 1.5 percent and gold shooting up to a seven-year high Monday.

Markets in South Korea and Italy led the decline on Monday.

"Wall Street is still on course for a slightly positive open but given how quickly Europe has turned south, I'm not confident it will last, " said Craig Erlam, senior market analyst at OANDA Europe.

Investors looking for safe harbors bid up prices for US government bonds and gold.

In the US, an early look at the S&P 500 sectors shows consumer discretionary (+0.8%), communication services (+0.8%) and information technology (+0.8%) leading the advance, while the energy sector (-0.2%) continues to lag. In Italy, the main market index was down more than 4.5% after the number of cases there topped 200 - including five deaths - and authorities started shutting down public buildings, schools and sports events in parts of the country.

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The S&P and the blue-chip Dow turned adverse for the 12 months to day and the Dow dropped more than one, 000 points on the day for only the 3rd time in its background. The 30-year US bond yield also reached a record low.

The S&P index recorded seven new 52-week highs and 22 new lows, while the Nasdaq recorded 17 new highs and 140 new lows. NY time, the lowest in more than 11 weeks on the largest dip in nearly 15 months. South Korea's benchmark Kospi dropped almost 4% to a roughly two-month low, with

The price of gold also rose, surging $14.50 to $1,663.30 per ounce.

Quincy Krosby, chief market strategist at Prudential Financial, said the market had been "sanguine about the spread of the coronavirus".

Benchmark U.S. crude oil lost 17 cents to $51.26 per barrel in electronic trading on the New York Mercantile Exchange, while Brent crude oil, the global standard, shed 22 cents to $55.72 per barrel.

"As the virus spreads globally, additional downside revisions in oil demand for this year may be required", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

In currency markets the Japanese yen strengthened 1.02% to 110.46 per dollar.

"The accelerated sell-off in the stock market has become hard for the oil market to ignore", he said.

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