/S&P 500 futures drop more than 1%, oil tumbles 3% as coronavirus continues to spread

S&P 500 futures drop more than 1%, oil tumbles 3% as coronavirus continues to spread


Stocks plunged and bonds rallied as intensifying concern over the impact of the deadly coronavirus rattled markets around the globe. Oil sank.

The S&P 500 Index slid the most in almost four months, with technology shares from Nvidia Corp. to Apple Inc. leading the drop. Alibaba Group tumbled about 6 per cent, China-focused Wynn Resorts Ltd. plummeted 9 per cent and airline stocks sank. Air Canada sank 6 per cent. European equities lost more than 2 per cent.

Stock and futures trading in China, closed for the longer Lunar New Year holiday, will resume on Feb. 3, according to people familiar with the matter.

This is now a sell first, ask questions later situation,

Alec Young of FTSE Russell

Treasury 10-year yields fell to the lowest level since October, while the dollar rose against most major currencies. The Swiss franc, the Japanese yen and gold paced gains in haven assets. The offshore yuan slid. Oil slipped more than 2 per cent.

Fears that China has failed to contain the pneumonia-like virus — which has killed at least 80 people and infected more than 2,700 — is spurring caution at the start of a week jam-packed with earnings. And such is the nervousness over the severity of the disease that money markets brought forward bets for a U.S. Federal Reserve interest-rate cut by a month to November.

“This is now a sell first, ask questions later situation,” said Alec Young, managing director of global markets research at FTSE Russell. “Markets hate uncertainty, and the coronavirus is the ultimate uncertainty — no one knows how badly it will impact the global economy. China is the biggest driver of global growth, so this couldn’t have started in a worse place.”

Elsewhere, oil tumbled to the lowest in more than three months on concern that the coronavirus will hit demand in a market that already has plentiful supply. Base metals and bulk commodities — which are closely aligned to China’s industrial activity — are getting hurt. Copper and iron ore plunged. The risk-off mood benefited havens, with gold climbing.

Here are some events to watch out for this week:

  • Tech giants Apple, SAP, Facebook, Samsung and South Korean chip maker SK Hynix announce earnings, as do Boeing, International Paper, GE, United Technologies, Lockheed Martin, Caterpillar, Lockheed Martin, Unilever, Exxon Mobil, Shell and Chevron.
  • The Senate impeachment trial of President Donald Trump continues in Washington Monday.
  • Fed policy makers are expected to open 2020 the same way they closed 2019 — by holding interest rates steady Wednesday.
  • The BOE meeting is highly anticipated Thursday after a series of dovish comments raised speculation policy makers could lower interest rates.
  • The U.S. reports fourth-quarter GDP Thursday.
  • The U.K. is scheduled to leave the European Union Friday.

These are the main moves in markets:

Stocks

  • The S&P 500 sank 1.8 per cent at 9:30 a.m. in New York.
  • The Stoxx Europe 600 Index slid 2.3 per cent.
  • The MSCI Emerging Market Index dipped 1.1 per cent.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1 per cent.
  • The euro was unchanged at $1.1025.
  • The Japanese yen appreciated 0.3 per cent to 108.93 per dollar.

Bonds

  • The yield on 10-year Treasuries slid eight basis points to 1.61 per cent.
  • Germany’s 10-year yield decreased four basis points to -0.38 per cent.
  • Britain’s 10-year yield fell five basis points to 0.511 per cent.

Commodities

  • The Bloomberg Commodity Index declined 1 per cent.
  • West Texas Intermediate crude declined 2.5 per cent to US$52.84 a barrel.
  • Gold increased 0.7 per cent to US$1,589.80 an ounce.

With assistance from Alfred Cang, Saket Sundria, Cormac Mullen, Todd White and Yakob Peterseil.

Bloomberg.com

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