NEW YORK: The biggest tumble in Chinese stocks in more than eight months led global equity markets lower on Thursday as concern mounted about the coronavirus outbreak in China.
Millions of Chinese are preparing to travel for the Lunar New Year, which begins on Saturday, increasing the potential for the disease to spread. The cities of Wuhan and Huanggang, representing a total population of about 18 million people, were put on a travel lockdown to prevent the virus from spreading, a public health measure that the World Health Organization called "unprecedented."
"Ultimately, the coronavirus is a slow-burning but important story for markets that is likely to last for months rather than just a few days," said TD Securities' European head of currency strategy, Ned Rumpeltin.
European stocks followed Asian markets lower, with the pan-European STOXX 600 index down 0.71%.
Yet news that Gilead Sciences Inc was assessing its experimental Ebolda drug as a possible treatment for the virus helped U.S.stocks pare their losses and left major market benchmarks mixed.
Gold and U.S. Treasuries also rose as investors sought out safer assets. Gold later reversed in Europe as part of a wider fall in metals markets that left copper at a six-week low and walloped 2% off nickel.
Benchmark 10-year notes last rose 11/32 in price to yield 1.7342%, from 1.771% late on Wednesday.
Deaths in China from the coronavirus rose to 17 on Wednesday, with more than 600 cases confirmed.
"The coronavirus has introduced some caution," said Michael McCarthy, chief market strategist at CMC Markets in Sydney. "There is no reason to expect a global pandemic now, but there is some repricing in financial markets."
The Chinese yuan fell to a two-week low, on course for its worst week since August. The Japanese yen climbed 0.2% to secure a third day of gains as the dollar went flat.
The euro fell to a six-week low and German bond yields dropped to their lowest in two weeks after European Central Bank President Christine Lagarde struck a slightly more dovish tone than some had expected.
U.S. crude slid 1.2% to $55.58, while Brent dropped 1.2% to $62.03.
Reuter also reported:
Wall Street struggled for direction on Thursday as investors digested mixed earnings and developing news about the coronavirus outbreak emanating from China.
Healthcare and financial shares helped pull stocks into the red through much of the session.
But news that Gilead Sciences Inc was assessing its experimental Ebola drug as a possible treatment for the virus helped stockspare their losses, and pushed the Nasdaq into positive territory.
Health officials in China put millions of people on lockdown in efforts to contain a coronavirus outbreak that has so far claimed 18 lives, but the World Health Organization (WHO) announced it was "a bit too early" to declare the virus a global health emergency.
"It feels like the coronavirus story is a convenient excuse to take a little profit, sit back and reassess," David Lafferty, chief market strategist at Nataxis Investment Managers in Boston. "The indexes have become so over bought it feels like it needed a little bit of a breather and I think that's what the coronavirus (sell-off) is really about."
The outbreak has strained global equity markets, just as millions of Chinese are preparing to travel ahead of the Lunar New Year.
Additionally, a spate of earnings reports, while beating Street estimates in many cases, have failed to impress investors.
"The market is pricing a real turn in earnings for 2020," Lafferty added. "If you tell me that companies are meeting estimates and the guidance is still positive it tells me that expectations were higher than people thought."
Fourth-quarter reporting season gathers steam, with 74 companies in the S&P 500 having reported. Of those, 67.6% have beat consensus expectations, according to Refinitiv data.
Analysts now see fourth-quarter earnings contracting by 0.7% from a year ago.
The Dow Jones Industrial Average fell 51.28 points, or 0.18%, to 29,134.99, the S&P 500 lost 0.93 points, or 0.03%, to 3,320.82 and the Nasdaq Composite added 8.26 points, or 0.09%, to 9,392.03.
Of the 11 major sectors in the S&P 500, six were trading in the red. Healthcare was the biggest percentage loser, while industrials enjoyed the largest gain.
Procter & Gamble Co results fell short of analyst expectations for the first time in five quarters, sending the consumer products company's stock down 1.0%.
Insurance bellwether Travelers Cos Inc reported better-than-expected quarterly profit, with underwriting gains tripling and catastrophe losses falling. Nevertheless, the company's shares were down 5.3%, and were the biggest drag on the blue-chip Dow.
Comcast Corp beat Street estimates but lost more subscribers than analysts expected, sending its shares down 3.6%.
Freeport McMoRan results also came in above expectations, but investors focused on the mining company's drop in Indonesia production. Its stock fell 5.6%.
Among winners, Union Pacific Corp gained 3.1% after the rail operator said the Phase 1 U.S.-China trade pact should reverse slumping volumes.
Declining issues outnumbered advancing ones on the NYSE by a 1.23-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favored decliners.
The S&P 500 posted 45 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 80 new highs and 42 new lows.- Reuters
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