European stock markets’ early gains stumbled on Friday after London confirmed the first two cases of the coronavirus in the UK.
Modest gains in the health care and media sectors were followed by the pan-European Stoxx 600 index slipping 0.1% below the flatline and utilities stocks falling 0.8% to lead losses.
Stock of Spain's Banco de Sabadell banking group plummeted 10.7% after it reported a surprise fourth-quarter net loss, while British broker Hargreaves Lansdown and Electrolux stock shrank 7% and 3.5%, respectively, amid warnings of potential cost hikes due to the coronavirus outbreak.
Growing concerns over the potential economic damage from the fast-spreading coronavirus sapped demand for riskier assets and drove investors to safe havens.— Thisoption.com (@ThisoptionC) January 27, 2020
- U.S. Stock Futures Dive
- Asia, European Stocks Tank
- Gold Soars
- Oil Plunges
It's a risk-off start to the week pic.twitter.com/YJ8dzqBKNC
At the same time, Avast shares and those of Asian markets rose on Friday morning, defying coronavirus-related concerns, with the cybersecurity software company’s stocks gaining at least 6.1%.
The developments followed European stocks tumbling 2% on Monday as Europe’ biggest luxury players have lost more than $50 billion in market value since last week.
Peter Garnry, head of equity strategy at Saxo Bank, was quoted by Reuters as saying that “equities are finally beginning to contemplate the possibility that the virus 2019-nCoV (coronavirus) in China will have a significant economic impact as the lockdown is now affecting 56 million people”.
The statement came after US stocks had posted their worst day since October, with the Dow Jones Industrial Average falling by 1.6%, or 453.93 points, to 28,535.8.
The S&P 500 also registered a 1.6% drop, or 51.84 points, declining to 3,243.63, and the Nasdaq Composite slid by 175.6 points to 9,139.1, a 1.9% drop.
Alec Young, managing director of global markets research at FTSE Russell, told CNBC that “China is the biggest driver of global growth, so this couldn’t have started in a worse place”.
“Markets hate uncertainty, and the coronavirus is the ultimate uncertainty in that no one knows how badly it will impact the global economy”, he added.
Corona Virus Cases Confirmed in UK, Russia
Earlier on Friday, Chief Medical Officer for England Chris Whitty announced that two patients in the country, who are members of the same family, have tested positive for coronavirus, and that they were getting "specialist care".
The novel strain of coronavirus has already spread to 20 countries since it was first detected in Wuhan in China’s Hubei province last month. The disease has already killed 213 people in China as well as infected over 9,600 more. Two cases of the virus have been confirmed in Russia, in the Zabaikalsky territory and in the Tyumen region.