Stock indexes around the world entered correction territory Friday in the wake of a sharp fall on Wall Street, amid deepening worries that the economic fallout from the global spread of the coronavirus may be more severe than previously expected.
Shares in Europe continued to slide, with the Stoxx Europe 600 shedding 2.7% and the German DAX losing 3.6%. Japan’s Nikkei 225, South Korea’s Kospi and Australia’s S&P/ASX 200 all fell more than 3%.
The declines put those global benchmarks into corrections, or a decline of at least 10% from a recent peak. U.S. indexes slipped into correction territory Thursday as the market rout continued to deepen, its sixth straight daily decline.
Futures tied to the S&P 500 were 0.7% lower Friday, indicating further declines are likely when the U.S. markets open. The benchmark notched its largest single-day percentage drop since August 2011 on Thursday. The index entered a correction from its highest-ever closing level in just six trading days, plunging 12% from its Feb. 19 peak. The Dow industrials tumbled 1,190.95 points, or 4.4%, to 25766.64, bringing its slide this week to more than 3,200 points.
“Today is the last day of a very rough week and people don’t want to take any risks over the weekend,” said Peter Dixon, an economist at Commerzbank. “So get your retaliation in first—sell now and worry about the consequences later because you’re not going to get penalized for being short in this market.”
The coronavirus has sickened more than 82,000 people globally and killed more than 2,800. It has spread to at least 46 countries, according to the latest tally by the World Health Organization. On Friday, China reported 327 new cases—the lowest since Jan. 23—and 44 deaths.
“The base case was for the outbreak to be contained in China and peak at the end of the first quarter of 2020,” said Paul Chew, head of research at Phillip Securities in Singapore.
“With cases now spreading even faster outside China and U.S. companies starting to issue profit warnings over this outbreak, the market is repricing due to the severity of this outbreak,” he said. Mr. Chew said he expected markets to trend down further until the rate of new infections began to stabilize.
The latest moves in the Asia-Pacific region added fresh losses to a selloff that, since starting last week, has already erased trillions of dollars in stock-market value.
The FTSE All World index, for example, has fallen almost 10% in six straight sessions of declines through Thursday. That cut its market value by roughly $5.2 trillion to about $47.1 trillion, according to Refinitiv Datastream.
Stocks in the materials, energy, transportation and financial sectors have seen some of the steepest declines, fueled by worries about an economic slowdown, travel bans and disruptions to global supply chains.
This year, Hong Kong-listed stock in PetroChina has fallen 22%, while shares in HSBC Holdings and Industrial & Commercial Bank of China, China’s biggest bank, have both fallen about 11% in the city. Mining giant BHP’s Sydney-traded shares tumbled Friday, taking its year-to-date losses there above 13%.
Reflecting those worries about demand for natural resources, crude oil prices were again under pressure Friday. Brent crude, the global benchmark, shed 2.7% to $50.78 a barrel, according to Futuresource.
Internet and health-care stocks have bucked the broader trend. While shares in Chinese online-gaming giant Tencent fell 3% on Friday, they are still up 3% for the year.
In other markets, demand remained high for haven assets. Gold was little changed, dropping 0.3%. The yield on the 10-year U.S. Treasury note, which has already plumbed record lows in recent days, slipped to 1.218%.
Willie Chan, Kim Eng Securities’ regional strategist in Hong Kong, said Asian markets had already priced in much of the likely hit to first-quarter earnings. He said while it was too early to say whether summer heat would kill the virus, that could release a lot of pent-up demand.
Japan’s Nikkei 225, South Korea’s Kospi and Australia’s S&P/ASX 200 all fell more than 3% on Friday, putting the benchmarks into corrections.
Photo: Cris Faga/Zuma PressWrite to Chong Koh Ping at chong.kohping@wsj.com
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February 28, 2020 at 03:30PM
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