Topline: U.S. stocks are set to open sharply lower on Monday following steep drops in European and Asian markets, as the number of coronavirus cases outside of China surged over the weekend, with Italy and South Korea becoming the latest two major economies at risk from the outbreak.
- Stocks plunged on Monday on news that the outbreak has now infected more than 79,000 people globally and killed over 2,600, with Italy, South Korea and Iran emerging as new coronavirus hotspots outside of China.
- Wall Street pointed to a sharp decline in early trading: The Dow Jones Industrial Average fell more than 900 points, dropping 3.1%, while the S&P 500 lost 3% and the Nasdaq Composite declined 3.4%.
- Airline and technology stocks were hard hit in pre-market trading, while shares of travel and luxury companies also struggled. The price of brent crude oil also fell over 4%, to its worst decline in almost five months, while safe-haven asset gold surged to a seven-year high.
- Italy is now the biggest coronavirus outbreak outside of Asia—with over 200 cases reported and five people dead, while South Korea has gone on high alert thanks to a spike in reported cases, which have surged past 800.
- In Europe, most benchmark indexes fell by more than 3%, and the Stoxx Europe 600 fell 3.4%—its biggest drop since June 2016.
- The main market index in Italy fell over 4.5%, while South Korea’s Kospi index declined 3.9% on Monday, its worst day since October 2018.
Crucial statistics: A wide variety of stocks were down on Monday. Airlines like Delta and American both fell by around 6%. Cancelled flights to mainland China and reduced demand for travel could wipe out $30 billion from the revenues of global airlines in total, according to the International Air Transport Association. Shares of big tech stocks like Apple, which has seen its supply chains disrupted by the virus, fell 4.7%. Athletic apparel giant Nike was down 5%, while cruise operators like Carnival Corp plunged 6.3%. Hotel and casino companies Las Vegas Sands and MGM Resorts fell 4% and 3.4%, respectively.
What to watch for: While South Korea and Italy have seen the sharpest rise in cases outside of China, Iran is emerging as a major hub for the disease in the Middle East. With over 60 cases and 12 deaths in Iran, several neighboring countries have closed their borders.
Tangent: Billionaire investor Warren Buffett told CNBC on Monday that a “very significant percentage of our businesses” will be impacted by the coronavirus.
Key background: The steep drop in U.S. equities follows the sell-off in international markets, as investors appeared to be rattled by the rising number of cases outside of China and fears that the outbreak could have a substantial impact on the global economy. Last week, fears over the coronavirus resurfaced to lead all three major U.S. stock market indexes into the red for their first weekly losses so far in February.
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