Global markets plunge as virus cases spread beyond Asia

NEW YORK — Stocks are opening sharply lower on Wall Street, pushing the Dow Jones Industrial Average down more than 700 points, as virus cases spread beyond China, threatening to disrupt the global economy. The early plunge in U.S. trading erased the Dow’s gains for the year. Markets in Europe and Asia had even bigger losses as infections spread in Italy, Iran and South Korea. Bond and gold prices surged as investors sought safety. The S&P 500 dropped 84 points, or 2.5%, to 3,251. The Dow fell 775 points, or 2.7%, to 28,212. The Nasdaq lost 298 points, or 3.1%, to 9,282

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below:

Shares skidded, oil prices sank and the price of gold surged on Monday as the number of people infected or killed by the viral outbreak that began in China surged, heaping more uncertainty on the economic outlook.

The decline promises a sharp drop on Wall Street when it opens and comes after finance chiefs of the Group of 20 major economies warned the outbreak that began in China is threatening to derail world growth.

Britain’s FTSE 100 sank 3.5% to 7,147, while the CAC 40 in Paris lost 3.7% to 5,806. Germany’s DAX fell 3.6% to 13,086. The FTSE MIB in Italy, which has seen a surge in new cases that lead to the lockdown of towns and businesses, dropped 4.6% to 23,620.

U.S. markets looked set for a sharp drop. The future for the Dow Jones Industrial Average down 2.6% while the S&P 500 future lost 2.7%.

The price of gold, viewed as a safe haven in times of peril, jumped $35.80 to $1,684.60 per ounce, its highest in seven years.

Another safe haven, U.S. Treasuries, were in high demand. That pushes down the yield, and that for the 30-year bond hit a record low of 1.85%

The yield on the more closely followed 10-year Treasury was at 1.40%. That yield, which is a benchmark for mortgages and other kinds of loans, was close to 1.90% at the start of this year.

Uncertainties are weighing on energy prices as well. Benchmark U.S. crude lost $2.07 or 3.9%, to $51.31 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gave up $2.86, or 5%, to $55.64 per barrel.

South Korea reported another large leap in new cases on Monday. The 70 latest new cases raised South Korea’s total to 833, and two more deaths raised its toll to seven. The latest updates sparked selling of shares, pulling the benchmark Kospi 3.9% lower to 2,079.04.

In Italy, police manned checkpoints around quarantined towns as authorities sought to contain new cases of COVID-19 virus that have made the country the focal point of the outbreak in Europe and fears of its cross-border spread.

The viral outbreak that began in China has infected more than 79,000 people globally and killed more than 2,600 people. China has reported 2,592 deaths among 77,150 cases on the mainland.

Travel restrictions, business closures and other efforts in China aimed at containing the spread of the virus have begun to disrupt supply chains and sales prospects for Apple and other big companies.

As the virus begins to disrupt other countries more severely – with business events being cancelled in South Korea and Italy, for example – some economists worry about a hit to economic growth that cannot be easily assuaged by authorities. Central banks can cut interest rates and governments can cut taxes, but that will do little in the short term to ease disruption to supply chains.

Kristalina Georgieva, the head of the International Monetary Fund, said that the virus outbreak “could put the recovery at risk” and said “it would be prudent to prepare for more adverse scenarios.”

Expectations have been building among traders that the Federal Reserve will need to cut interest rates this year to help the economy. They’re pricing in a 90% probability of at least one cut this year, up from an 85% probability a day ago and a 58% probability a month ago.

Officials in Beijing promised more help for companies and the economy, saying they still expect their growth targets can still be reached despite the outbreak.

Finance and planning officials on Monday said they are looking at how to channel aid to businesses after President Xi Jinping publicly promised over the past week to ensure farming and other industries recover quickly.

The government is looking at “targeted tax reduction,” interest rate cuts and payments to poor and virus-hit areas, said an assistant finance minister, Ou Wenhan. “We will do a good job of implementing large-scale interest rate reduction and tax deferral and ensure effective implementation as soon as possible,” he said.

The latest measures failed to lift the Shanghai Composite, which lost 0.3% to 3,031.23, though the smaller Shenzhen A-share market jumped 1.4%.

Elsewhere in the region, the S&P ASX/200 in Sydney lost 2.3% to 6,978.30. Hong Kong’s Hang Seng dropped 1.8% to 26,820.88 and Thailand’s SET index lost 2.5%. India’s Sensex lost 1.2% to 40,689.12. Benchmarks in Jakarta, Taiwan and Singapore fell by more than 1%.

Japan’s markets were closed for a holiday.

Hopes that the outbreak had been contained were premature, Mizuho Bank said in a commentary, “And indeed, fears of secondary infections proliferating outside of China have come home to roost, sending risk assets in a tailspin and a wave of refuge-seeking into safe-haven.”

In currency trading, the dollar fell to 111.38 Japanese yen from 111.57 yen on Friday. The euro weakened to $1.0819 from $1.0847.

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Joe McDonald in Beijing contributed to this report.

The Associated Press