Stock markets around the world sold off sharply and oil prices plummeted on Monday, as fears mounted over the spread of the deadly coronavirus.
Major European stock markets fell over 2%, suffering the steepest one-day falls seen so far this year. US stock markets also opened sharply lower.
“The market is back in panic mode about China’s coronavirus,” said Russ Mould, investment director at stockbroker AJ Bell.
The sell-off came amid growing fears about the rapid spread of the deadly coronavirus. The BBC reported the death toll from the SARS-like virus has now risen to 81 and almost 3,000 people have been confirmed as infected; 44 cases have been detected outside China.
Worryingly, Chinese health officials warned coronavirus appears to be contagious before symptoms appear, making it more difficult to contain.
Over the weekend, China extended its national Lunar New Year holiday by three days in a bid to prevent travel. Millions of people remain under lockdown in cities across the country.
Some of the steepest share price declines came in the travel sector, despite falling oil prices theoretically lowering fuel costs. EasyJet (EZJ.L) dropped 5.6% and British Airways-owner IAG (IAG.L) lost 5.6% in London.
The luxury sector was also under pressure, as China is the world’s biggest luxury market. Burberry (BRBY.L) declined by 4.3% in London, while in Paris Louis Vuitton-owner LVMH (MC.PA) shed 3.5% and Gucci-owner Kering (KER.PA) declined 3.9%.
Commodity stocks were hit, given China’s huge appetite for raw materials. Steel maker Evraz (EVZ.L) fell 3.6%, miner Anglo American (AAL.L) dropped 4.5%, and commodity broker Glencore (GLEN.L) lost 3.9%.
Sebastian Galy, a senior macro strategist at Nordea Bank, said Monday the outbreak could knock between 1% and 1.5% off China’s annual GDP growth. He cited lost work days and the hits to industries like tourism and travel.
“As the death toll rises, all eyes are on the World Health Organisation,” AJ Bell’s Mould said. “So far it has resisted calls to declare the outbreak a health emergency. Should that change there could be restrictions on international trade and travel, putting pressure on a fragile global economy.”