Stock markets were in turmoil Monday morning as a fresh surge in the number of coronavirus cases were reported outside China, sending investors fleeing to safer havens just days after G20 officials warned that the ongoing outbreak would have a detrimental effect on global growth if not contained in the near future. 
The Dow Jones Industrial Average plunged almost 1,000 points, or just over three per cent when U.S. markets opened Monday, while the S&P 500 fell by 3.3 per cent. The Nasdaq dropped more than 300 points, or 3.2 per cent within the first two hours of the trading day. 
Gold prices soared by as much as 2.8 per cent, reaching a seven-year high while the 10-year Treasury yield dropped to its lowest level in almost four years. 
Canadian markets felt the pinch too, with the TSX plunging by almost 300 points, or roughly 1.6 per cent. The VIX, a measure of stock market volatility, was up by 35 per cent. 
Soothing words from Chinese Premier Li Keqiang and flexible guidance from the PBOC is being ignored and markets may be more concerned about what happens to the case count with the pressure from Chinese authorities to resume production, wrote Derek Holt, head of capital markets economics at Scotiabank, in a Monday morning note. 
“Risk assets are selling off hard on coronavirus concerns,” he added.
On Sunday, China confirmed 150 new deaths, pushing its national death toll to almost 2,600. Coronavirus infections in South Korean surged fivefold over the weekend, to over 800, while authorities in Iran reported 43 infections and 12 deaths. 
In Italy, at least five people have died as the number of cases surged from just three on Friday to more than 200 by Monday morning, largely confined to a number of smaller towns in northern Italy. Italy is now the epicentre of the biggest coronavirus outbreak outside Asia, as officials still struggle to track down how the virus first entered the country. 
Londons FTSE Index plummeted by 250 points on Monday, or 3.5 per cent, while Italys FTSE MIB Index dropped as much as 5.7 per cent, its biggest decline since mid-2016. 
With containment efforts (inevitably) failing, the epicentre of FX market concerns may now shift more conclusively to the European theatre, wrote Ned Rumpeltin, TDs European head of FX strategy in a note. With the region already on a (very) fragile macro footing, we think investors could become highly sensitive to concerns of further disruptions to global supply chains and aggregate demand, he added. 
Airline stocks in particular took a hit on Monday, with American Airlines dropping 8.5 per cent, and Air Canada plunging 5.7 per cent, as the company continued to restrict the number of flights between Canada and China. 
The coronavirus outbreak has caused global travel chaos, with Turkey, Pakistan, Armenia and Oman closing their borders with Iran on Monday citing the surge in the number of cases.
Hong Kong, too, closed its doors to all arrivals from South Korea over the weekend.
American companies such as Apple Inc. and Nike Inc. have cautioned that they could see an impact on business as China serves as both a market and manufacturing hub for their products.
“Ripple effects on global supply chains are likely to continue to grow at a rate dependent on the scope and rate of any recovery, but undoubtedly Asian economies dependent on imports from, or exports to China are on a first line of vulnerability,” wrote Edward Morse, global head of commodities at Citibank.
Email: | Twitter: VanmalaS