By Rodrigo Campos
NEW YORK (Reuters) – Stocks across the globe and oil prices continued to tumble on Thursday and U.S. Treasury yields hit record lows as traders fretted over the economic impact of the spreading coronavirus.
No country should make the “fatal mistake” of assuming it will be spared the coronavirus, the World Health Organization said, as governments from Iran to Australia shut schools, canceled big events and stocked up on medical supplies in a race to contain the rapid global spread.
Bets that the U.S. Federal Reserve will cut interest rates to help soften the expected blow to the world’s largest economy sent the dollar lower against a basket of its peers.
On Wall Street, the S&P 500 was set for its steepest weekly pullback since the global financial crisis more than a decade ago as rising numbers of new infections outside China raised fears of a pandemic.
“It’s not a China thing, it’s becoming more global … in terms of the spread of the virus and its economic impact,” said Willie Delwiche, investment strategist at Robert W. Baird in Milwaukee.
“There’s a lot of uncertainty right now about where that impact lands. … It’s also possible that forecasts are over-reacting to the downside.”
The Dow Jones Industrial Average fell 825.11 points, or 3.06%, to 26,132.48, the S&P 500 lost 93.61 points, or 3.00%, to 3,022.78 and the Nasdaq Composite dropped 289.68 points, or 3.23%, to 8,691.10.
The pan-European STOXX 600 index lost 3.75%, for a more than 10% drop from its record closing high set last week.
MSCI’s gauge of stocks across the globe shed 2.47%.
Emerging market stocks lost 0.90%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.07% lower, while Japan’s Nikkei lost 2.13% to a 4-1/2-month low.
With the infection rate in China appearing to be slowing, the blue-chip CSI300 index finished up 0.3%. China’s central bank said on Thursday it would ensure ample liquidity to help limit the impact of the epidemic.
(GRAPHIC: Daily market value loss – https://fingfx.thomsonreuters.com/gfx/buzzifr/15/7815/7815/Pasted%20Imag…)
Treasury yields ticked higher after an initial drop sent the yield on the benchmark 10-year note to an all-time low for the third consecutive day.
U.S. 10-year notes last rose 6/32 in price to yield 1.2905%, from 1.31% late on Wednesday. The 30-year bond last rose 9/32 in price to yield 1.7865%, from 1.798%.
The dollar fell as investors bet that the Fed would cut interest rates to offset the impact of the spreading coronavirus. With U.S. rates relatively high, and the scope for them to fall much wider, investors are reversing out of the dollar.
“Rate cut expectations have gained momentum and U.S. rate expectations are falling a lot more than they are in the euro zone,” said Thu Lan Nguyen, an analyst at Commerzbank.
The dollar index fell 0.603%, with the euro up 0.95% to $1.0985. Sterling was last trading at $1.2884, down 0.15% on the day.
The Japanese yen strengthened 0.43% versus the greenback at 109.95 per dollar.
Gold was little changed after hitting a fresh 7-year high earlier.
Oil prices plunged for a fifth day on fears of a pandemic that could slow the global economy and dent demand for crude.
U.S. crude fell 3.92% to $46.82 per barrel and Brent was last at $51.91, down 2.84% on the day.
(Reporting by Rodrigo Campos, additional reporting by Medha Singh in Bengaluru, Noah Browning in London, Kate Duguid in New York and Ross Kerber in Boston; Editing by Will Dunham, Nick Zieminski and Richard Chang)