World Stock Rout Extends; Treasuries Jump With Yen: Markets Wrap


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9 shares, 65 points

(Bloomberg) — Fear tightened its grip on global markets Friday, with European stocks following a plunge in Asia and U.S. index futures signaling yet more pain after the biggest one-day rout on Wall Street since 2011. The yen jumped with most sovereign bonds as traders sought shelter.

Fresh evidence of the coronavirus spreading outside China helped drive the Stoxx Europe 600 Index down more than 3% at the open, while futures on the three main U.S. equity gauges pointed to a more modest retreat on Wall Street. With the likes of Citigroup Inc. analysts saying they want to see markets “closer to panic” before going all-in on global equities, there was no sign of dip-buying ahead of the weekend.

In Asia, benchmarks from Tokyo and Seoul to Shanghai and Sydney saw declines of more than 3%. WTI crude oil sank below $46 a barrel and U.S. and Australian 10-year yields hit fresh record lows. Russia’s ruble and Indonesia’s rupiah led emerging-currency declines.

Global shares are on course for the worst week since the 2008 crisis, down more than 10% from this month’s peak. That’s after California said it’s monitoring 8,400 people for signs of the virus after they had traveled to Asia, confirmed cases in South Korea topped 2,000 and Japan began shutting down schools.

“The markets are terrified that the disruption is going to hit GDP and then will hit profits at some stage,” Andrew Freris, chief executive officer of Ecognosis Advisory Co. in London, told Bloomberg TV. “The only thing central banks can do is cut interest rates, and cutting interest rates isn’t going to do anything to restore the supply disruption in individual countries.”

The yen is on course for its biggest weekly gain since mid-2016. New Zealand’s dollar fell about 1% Friday as the country reported its first case of the virus and investors bet on policy easing from the central bank.

Downgrades to expectations for global growth keep rolling in and money markets now see three Federal Reserve interest-rate cuts this year. Bank of America predicted that the global economy will see its weakest year since the financial crisis as the virus damages demand in China and beyond.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index decreased 2.9% as of 8: 05 a.m. London time.Futures on the S&P 500 Index dipped 0.6%.Nasdaq 100 Index futures declined 0.6%.South Korea’s Kospi index sank 3.3%.The MSCI Asia Pacific Index sank 2.6%.

Currencies

The Bloomberg Dollar Spot Index was little changed.The euro was little changed at $1.1005.The British pound fell 0.1% to $1.2873.The Japanese yen strengthened 0.6% to 108.95 per dollar.

Bonds

The yield on 10-year Treasuries fell six basis points to 1.20%.The yield on two-year Treasuries decreased six basis points to 1%.Germany’s 10-year yield declined four basis points to -0.59%.Britain’s 10-year yield dipped four basis points to 0.429%.

Commodities

Brent crude decreased 2.5% to $50.86 a barrel.Iron ore fell 1.7% to $82.18 per metric ton.LME copper dipped 1.2% to $5,547.50 per metric ton.LME aluminum declined 1.3% to $1,668 per metric ton.

–With assistance from Eric Lam, Cormac Mullen, Joanna Ossinger and Gregor Stuart Hunter.

To contact the reporters on this story: Todd White in Madrid at twhite2@bloomberg.net;Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Sam Potter at spotter33@bloomberg.net

For more articles like this, please visit us at bloomberg.com

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