#GlobalEconomy; #CorporateProfits; #CoronavirusOutbreak; #InvestorsRetreat
New York, Feb 28 (Canadian-Media): Corporate profits in the world economy has suffered a heavy blow when equities shed a tenth of their value this week in a rout extending into Friday with with investors' retreats due to mounting concerns of the coronavirus outbreak, media reports said.
World stocks. Image credit: Twitter handle
As US stocks dropped 4 percent in morning trading on Friday S&P dropped 500 from last week’s record high to 15 percent.
The decline led to the selling of European and Asian equities in the final trading day of the week.
There was a drop of 2.6 in MSCI’s Asia Pacific index, while the Stoxx Europe 600 and the FTSE 100 both dropped by 4 percent.
“There is fear in the streets,” said Patrick Kaiser, portfolio manager for Brandywine Global Investment Management. “No one wants to have exposure over the weekend.”
Travel and leisure stocks in Europe have been hit fiercely by 19 percent from last week, the heaviest decline since the terrorist attacks in September 2001.
Investors are regarding the Covid-19 coronavirus not as being predominately a Chinese issue, but to be a fast-spreading global concern.
Gold, which had been in demand this week against sliding stock markets. But it its price also fell 3.7 percent to $1,582 an ounce, its biggest one-day drop since 2013.
US government debt, considered to be one of the safest holdings dropped below 1.2 per cent on Friday for the first time to hit 1.167 per cent pointing to sudden tightening of US' financial conditions.
“Over the past few days financial conditions have tightened sharply in response to rising fears that the coronavirus could exert a more severe and persistent drag on global and US growth than previously expected,” Deutsche Bank said.
The rising concerns of the spread of Covid-19 far beyond Asia has hit the investors hard with the fear the economy would be disrupted.
As stocks tumbled on Monday and Tuesday due to coronavirus fears, Robert Herjavec, founder and CEO of Herjavec Group said that markets are starting to take note of how the global trading ecosystem could be negatively affected.
“What I think we all learned yesterday is how truly interconnected the world is in ways that we don’t even think. The coronavirus breaks out in South Korea, [so] why does this affect the global economy? South Korea is the number one shipping point for most goods out of Asia. So anything out of Asia is going through South Korea and if they shut down, how do we get goods?” he said.
More than 83,000 people have been infected and 2,858 have died.
European governments have taken action in an attempt to arrest the virus’ spread.
Around 1,000 people in a town in the country’s west of Germany have already been quarantined, while some 50,000 people have been locked down in Italy’s industrial north.
A ban launched by Switzerland on events attended by more than 1,000 people led Geneva's Friday's annual motor show to be called off.
There have also been cancellations of other major industry gathering such as the Mobile World Congress in Barcelona.
World Health Organization (WHO) reported Saturday that coronavirus has wiped $6 trillion off markets.
With the WHO saying it's time to prepare for a potential pandemic, there are fears Tokyo 2020 may be impacted.