The rapid spread of the coronavirus (COVID-19) in South Korea and Italy triggered a sell-off across Asian markets yesterday.
A sharp rise in cases reported from Italy, South Korea and Iran raised fears the virus had broken free into the rest of the world outside China which would mean a rapid slowing in business activity.
The jump in Italian cases rattled investors on concerns about the potential for the virus to spread deeper into Europe and cause economic disruption there.
South Korea seems to be the worst-hit outside of China. The country is now on high alert while the number of infections jumped to 763 and deaths rose to seven.
In Italy, officials said a third person infected with the flu-like virus had died, while the number of cases jumped to above 150 from just three before Friday.
Italian banks closed their branches on Monday (and the country’s weekend soccer competition was suspended).
Iran, which announced its first infections last week, said it had confirmed 43 cases and eight deaths, with most of the infections in the Shi’ite Muslim holy city of Qom.
Saudi Arabia, Kuwait, Iraq, Turkey, and Afghanistan have all imposed travel and immigration restrictions on Iran.
South Korea’s KOSPI index fell more than 3.4% on Monday while the ASX 200 in Australia shed 2.25% of its value. Losses were also reported in Tokyo and Hong Kong (1.7%) and China (Shanghai fell 0.25%).
European markets were down more than 2% in early trading on Monday and US stock futures had losses of close to 25 in early futures trading in Europe.
As a result, the ASX had its worst day in seven months on Monday.
The Australian dollar again touched ten-year lows around 65.85 they hit on Friday night and gold prices soar to record highs in Australian dollars.
The S&P/ASX 200 dropped 2.25% to 6978.3 points on Monday, the biggest drop since last August.
Energy, information technology, industrial, and consumer discretionary sectors all fell more than 3%. The best performing sector was communications with a fall of -1.4% thanks to a solid 5.6% rise by New Zealand broadband provider Chorus after it upgraded full-year guidance.
Plumbing supplier Reliance Worldwide fell 26.4% after it lowered its guidance. BlueScope Steel shares lost nearly 8% on a weak interim profit and outlook. Air New Zealand shares fell more than 5% after it joined Qantas in cutting capacity in Asia, cross the Tasman and in NZ because of the virus.
Gold miners did well after the safe-haven asset reached a record high in Australian dollars of $2,537, and a seven-year high of $US1,680 in US dollars on Friday. It was trading around $US1,666 in early European dealings on Monday night.
