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Global Stocks Fall as China Locks Down Cities; Shanghai Composite Index slides 2.8%, its biggest drop since May
Thursday, January 23, 2020, 11:31 AM ET
By Steven Russolillo and Michael Wursthorn
Wall Street Journal
Stocks from New York to London to Shanghai slumped Thursday, as China grappled with a worsening viral outbreak that led investors to reassess the potential economic fallout world-wide.
The Dow Jones Industrial Average fell 173 points, or 0.6%, to 29013 in recent trading, as most of the 30 stocks in the index suffered losses. The S&P 500 declined 0.4%, and the Nasdaq Composite slid 0.2%.
The U.S. selloff followed the Shanghai Composite's biggest drop since May. The benchmark sank 2.8% on the final day of trading before the market closes for the Lunar New Year holiday period.
Investors, meanwhile, sought safety in traditional haven assets, sending gold and bonds prices higher.
The Chinese government on Thursday locked down Wuhan , where the new coronavirus originated, as well as a second city in a dramatic escalation of efforts to contain the outbreak that has killed at least 17 people and infected more than 500 so far. The lockdowns come shortly before one of the busiest travel periods for people in China and the region, which could enable the pneumonia-causing virus to spread further, authorities said.
Concerns about what the outbreak may mean for economic growth in China and elsewhere weighed on stocks in other parts of the world, said Lars Kreckel, global equity strategist at Legal & General Investment Management .
"What's going on right now is it's the coronavirus in China: that's worse than expected," Peter Garnry , head of equity strategy at Saxo Bank . "What the market is trying to price in is what is the economic cost."
The caution comes as investors look to past viral outbreaks , including severe acute respiratory syndrome, or SARS, to assess how bad the damage could be on the economy and markets this time around.
Airlines listed in Hong Kong and Shanghai, including Cathay Pacific Airways , fell sharply. Airline stocks in the U.S. followed suit, with American Airlines Group and United Airlines Holdings shedding 3% and 1.9%, respectively.
The fallout from the outbreak also touched energy companies around the world. Crude oil prices slid 2.8% to $55.18 a barrel as investors worried the virus could dampen demand for the commodity.
Energy stocks, which are sensitive to swings in oil prices, fell 0.9% in recent trading.
Meanwhile, investors sought assets that tend to hold up better during volatile stretches.
Shares of utilities and real-estate stocks notched small gains, as investors sought income-generating stocks. Gold prices rose 0.4%. And the yield on the benchmark 10-year U.S. Treasury note fell to 1.720%, according to Tradeweb , from 1.768% a day earlier. Yields fall when prices rise.
The pullback in yields weighed on bank stocks as lower rates tend to compress their net interest margins, a key measure of lending profitability. Financial stocks in the S&P 500 slid 1.1%.
Amid the broad pullback, some of the biggest moves in individual stocks followed earnings.
Travelers led the Dow industrials lower, falling 5%, even after the insurer said catastrophe losses fell from a year earlier.
Shares of Procter & Gamble slipped 1.1% after the consumer-products giant's sales in the latest quarter fell short of analysts' expectations.
Later in the day, Intel is scheduled to report results.
Earnings so far have generally beaten analysts' expectations, according to Mr. Kreckel.
"This is not a part in the cycle where you get 10% earnings growth," Mr. Kreckel said. "But it's enough to keep equity markets where we are today."
--Caitlin Ostroff contributed to this article.
Write to Steven Russolillo at steven.russolillo@wsj.com and Michael Wursthorn at Michael.Wursthorn@wsj.com
Global Stocks Fall as China Locks Down Cities
Thursday, January 23, 2020, 11:31 AM ET
By Steven Russolillo and Michael Wursthorn
Wall Street Journal
Stocks from New York to London to Shanghai slumped Thursday, as China grappled with a worsening viral outbreak that led investors to reassess the potential economic fallout world-wide.
The Dow Jones Industrial Average fell 173 points, or 0.6%, to 29013 in recent trading, as most of the 30 stocks in the index suffered losses. The S&P 500 declined 0.4%, and the Nasdaq Composite slid 0.2%.
The U.S. selloff followed the Shanghai Composite's biggest drop since May. The benchmark sank 2.8% on the final day of trading before the market closes for the Lunar New Year holiday period.
Investors, meanwhile, sought safety in traditional haven assets, sending gold and bonds prices higher.
The Chinese government on Thursday locked down Wuhan , where the new coronavirus originated, as well as a second city in a dramatic escalation of efforts to contain the outbreak that has killed at least 17 people and infected more than 500 so far. The lockdowns come shortly before one of the busiest travel periods for people in China and the region, which could enable the pneumonia-causing virus to spread further, authorities said.
Concerns about what the outbreak may mean for economic growth in China and elsewhere weighed on stocks in other parts of the world, said Lars Kreckel, global equity strategist at Legal & General Investment Management .
"What's going on right now is it's the coronavirus in China: that's worse than expected," Peter Garnry , head of equity strategy at Saxo Bank . "What the market is trying to price in is what is the economic cost."
The caution comes as investors look to past viral outbreaks , including severe acute respiratory syndrome, or SARS, to assess how bad the damage could be on the economy and markets this time around.
Airlines listed in Hong Kong and Shanghai, including Cathay Pacific Airways , fell sharply. Airline stocks in the U.S. followed suit, with American Airlines Group and United Airlines Holdings shedding 3% and 1.9%, respectively.
The fallout from the outbreak also touched energy companies around the world. Crude oil prices slid 2.8% to $55.18 a barrel as investors worried the virus could dampen demand for the commodity.
Energy stocks, which are sensitive to swings in oil prices, fell 0.9% in recent trading.
Meanwhile, investors sought assets that tend to hold up better during volatile stretches.
Shares of utilities and real-estate stocks notched small gains, as investors sought income-generating stocks. Gold prices rose 0.4%. And the yield on the benchmark 10-year U.S. Treasury note fell to 1.720%, according to Tradeweb , from 1.768% a day earlier. Yields fall when prices rise.
The pullback in yields weighed on bank stocks as lower rates tend to compress their net interest margins, a key measure of lending profitability. Financial stocks in the S&P 500 slid 1.1%.
Amid the broad pullback, some of the biggest moves in individual stocks followed earnings.
Travelers led the Dow industrials lower, falling 5%, even after the insurer said catastrophe losses fell from a year earlier.
Shares of Procter & Gamble slipped 1.1% after the consumer-products giant's sales in the latest quarter fell short of analysts' expectations.
Later in the day, Intel is scheduled to report results.
Earnings so far have generally beaten analysts' expectations, according to Mr. Kreckel.
"This is not a part in the cycle where you get 10% earnings growth," Mr. Kreckel said. "But it's enough to keep equity markets where we are today."
--Caitlin Ostroff contributed to this article.
Write to Steven Russolillo at steven.russolillo@wsj.com and Michael Wursthorn at Michael.Wursthorn@wsj.com
Global Stocks Fall as China Locks Down Cities
. But yes, must assume in CA by now, and global. But thats why we prep....darn it.
