The expanding coronavirus turns the stock markets deep red. The Amsterdam AEX closed on a loss of 3.9 percent on 593 points. On Wall Street, the Dow Jones opened with a loss of 2.8 percent. Such falls are qualified as ‘very sharp’.
The decline started immediately this morning, after a weekend full of news about the rapid spread of the corona virus in Italy and South Korea.
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Aviation companies, banks, insurers, steel companies and companies in the technology sector in particular contribute a lot.
On Wall Street the decline was led by companies that make microprocessors. There are major concerns about the availability of parts in that industry.
The substantial declines in shares such as American Airlines and Norwegian Cruise Line are also driven by fears of the consequences of the Corona outbreak.
The oil price is falling. The collapse of economic activity reduces the demand for energy. A barrel of Brent crude oil currently costs $ 56. At the beginning of January, before the outbreak, a barrel cost 68 dollars.
With this kind of economic tensions, the gold price rises because gold is considered a refuge. Gold now costs $ 1670 for a troy ounce (31.1 grams), the highest price in more than seven years. At the beginning of January that was $ 1530.
The International Monetary Fund (IMF) regards the outbreak as an emergency situation and has reduced growth expectations for the world economy by 0.1 percent and that of China by 0.4 percent. The IMF says it has to deal with “more nasty scenarios” if the spread becomes wider and lasts longer and becomes a pandemic.