By Anna Hirtenstein
Stocks and crude oil tumbled Monday on concerns about China's viral outbreak, as the detection of infected patients in the U.S., Australia and France led to escalating concerns about its containment and potential economic impact.
Futures linked to the Dow Jones Industrial Average index dropped 1.4%. In Europe, the Stoxx Europe 600 retreated 2%, led by declines in the U.K. and France. The Chinese yuan slumped 0.7% against the dollar in offshore trading and the Australian dollar declined 0.8%.
The coronavirus has infected more than 2,700 people and killed at least 80, mostly in China's Hubei province, with public-health officials warning that it is growing more contagious. The number of U.S. cases has risen to five and the government is working to evacuate American citizens from the epicenter.
"It's unclear how far it could have potentially spread," said Georgina Taylor, a multiasset fund manager at Invesco. "If it turns into a global health issue, that's really the next piece of information that would worry us."
Investors headed into haven assets such as government bonds, gold and the Japanese yen. The benchmark 10-year Treasury yield fell six basis points to 1.629%, on pace for its lowest closing level since October.
U.S. stocks are poised for swings as the Cboe Volatility Index, or VIX, which measures expected moves in the S&P 500 index, has climbed to its highest level since the start of this year.
Hotel, cruise and airline stocks fell on concerns that the coronavirus could affect global travel. The Chinese government has imposed restrictions on movement in Hubei province, and the U.S. Centers for Disease Control and Prevention issued a warning to avoid nonessential travel to this part of China.
In London trading, InterContinental Hotels slid 5.9% and Carnival declined 4.9%. In premarket trading, Wynn Resorts lost 6.6%, due to its large presence in gambling hot spot Macau. Las Vegas Sands was also down 5.3%.
Airlines were among the biggest losers in the Stoxx Europe 600 on Monday, led by Air France-KLM's 6.5% decline. British Airways owner International Consolidated Airlines fell 5.8% and easyJet lost 4.6%.
Miners also slumped as investors feared that the virus outbreak could erode China's demand for industrial commodities. Copper hit its lowest level in eight weeks, trading at $5,819 on the London Metal Exchange. BHP Group slipped 4.3%, Rio Tinto was down 4.2% and Anglo American declined 4.3%.
Markets in China, Hong Kong and South Korea were closed Monday for the public holiday. Japan's Nikkei 225 index closed down 2%.
Oil prices slumped by the most in over four months as the virus outbreak threatens to damp economic growth in China, the world's biggest energy consumer. Brent crude, the global benchmark, declined 3.4% before recovering slightly to trade at $58.24 a barrel.
Russia's ruble also lost 0.8% against the dollar, as falling oil prices reduced the energy exporter's income. Norway's krone edged down 0.5% against the euro.
Jordan Rochester, a foreign-exchange strategist at Nomura, blamed the oil price. "All the oil currencies are suffering this morning. That's typically the ruble in emerging markets, and in the G-10, Canada and Norway."
The yield on Italy's benchmark 10-year government bond dropped as much as 19.7 basis points to 1.033% after Sunday's regional elections resulted in a win for the center-left Democratic Party in the Emilia Romagna and Calabria areas. The nationalist League party is losing support in Italy, reducing the country's political risk. Italy's bonds are trading closer to Germany's benchmark bunds, with the spread between the two tightening by more than 10 basis points.
"Had the League been successful, they would have been able to claim that the balance of power within public opinion has shifted, it could have had an effect of weakening the government position," said Luca Cazzulani, a senior fixed income strategist at UniCredit. The regional election result "reduced concerns that Italy could end up having snap elections in the coming months, that's why the market is reacting positively."
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