By Chong Koh Ping and Caitlin Ostroff
Global stock markets dropped and U.S. government bonds rallied as investors braced for greater economic fallout from the international spread of the coronavirus.
European indexes dropped, with the Stoxx Europe 600 down 2.3% and the German DAX falling 2.5%. In Asia, Japan's Nikkei 225 fell 2.1%, while Australia's S&P/ASX 200 lost 0.8% and Korea's Kospi declined 1%.
Futures tied to the S&P 500 were down 1%, pointing to likely declines when U.S. markets open later Thursday. The yield on the 10-year U.S. Treasury note, which registered a record closing low of 1.310% on Wednesday, dropped further to 1.303%, according to FactSet data. Yields move inversely to prices.
Thursday's declines in Europe and Asia follow a fifth consecutive fall on Wall Street, with investors spooked by a growing number of coronavirus cases outside China and fears that the epidemic would dent corporate earnings and global growth.
More than 82,000 people have been infected and the death toll stands at more than 2,800 globally, according to recent national statistics from China, South Korea and elsewhere. On Wednesday, American authorities said a patient in California might be the first U.S. coronavirus case to be diagnosed without a clear explanation for how the disease was transmitted.
"The global fear factor has become stronger due to the warnings coming out from the U.S.," said Song Seng Wun of CIMB Private Banking in Singapore. "And as recession risks grow, the markets have become more jittery," he said.
Brent crude, the global oil benchmark, was down 1.3% at $52.15. Gold rose 0.5% to $1,650 an ounce on Thursday.
In Chinese markets, Hong Kong's Hang Seng Index shed 0.6% while the Shanghai Composite closed slightly up, adding 0.1%.
"There is a repricing of global and corporate growth [expectations] after the outbreak of the coronavirus, and the markets are down on the back of that," said Tham Mun Hon, head of Greater China research at UOB Kay Hian in Hong Kong.
Although U.S. stocks had a strong start Wednesday, the Dow Jones Industrial Average and S&P 500 both gave up gains to close lower. That meant both benchmarks have now retreated for five consecutive sessions as concerns have mounted over the economic impact of the coronavirus.
In a survey of U.S. companies in China, nearly half of them said they expect earnings to take a hit this year if business fails to return to normal by the end of April.
Write to Chong Koh Ping at firstname.lastname@example.org and Caitlin Ostroff at email@example.com
(END) Dow Jones Newswires
February 27, 2020 04:13 ET (09:13 GMT)
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