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Global markets across Europe and Asia have plunged severely on Monday as South Korea and Italy report several new affected cases of the coronavirus on Sunday. Analysts request investors to maintain caution at this stage.
At press time, the Dow Jones Industrial Average Futures lost over 400 points to 28,540 levels. At the Monday opening, the stock futures are having a massive bloodbath on Wall Street as the coronavirus cases outside China surge significantly.
As the possibility of the global coronavirus pandemic surges, global investors remain worried and continue to watch further developments. As Dow futures slide 1.4%, the S&P 500 and Nasdaq futures dropped 1.4% and 1.8% respectively.
Apart from the U.S. markets, the ripples have spread to Asian and European markets as well over concerns of a global coronavirus pandemic.
South Korea and Italy See Massive Surge in Infected Cases
Coronavirus outbreak was first registered in the Wuhan City of China last month in January 2020. However, this infectious virus has moved out of China and spread globally at an unprecedented rate. Currently, the Coronavirus cases have been significantly picking up in South Korea and Italy.
On Sunday, February 23, Seoul raised the virus alert to its “highest level”. In South Korea, the total number of reported cases has jumped to 763 with seven deaths until now. South Korean tech giant Samsung Electronics Co Ltd (KRX: 005930) had to shut its factory last Saturday after an employee was diagnosed with the Covid-19 virus.
South Korea’s Kospi (KOSPI) is facing its worst-ever fall on Monday since October 2018. KOSPI closed nearly 3.9% down on Monday and stands as the most affected index in Asia, at the press time. Elsewhere in Asia, China’s Shanghai Composite (SHCOMP) is down 0.3% while Hong Kong’s Hang Seng (HSI) has dropped 1.6%.
In Europe, Italy stands as the worst-affected country as on date with over 157 cases in a very short span of time. Three deaths have been reported so far as the government has announced lockdowns on several towns in the northern region.
President Xi Jinping Admits His Government’s Shortcomings
The fears of the coronavirus spread in China still continue as the situation is still not under absolute control. Last week, China’s President Xi Jinping admitted that the coronavirus epidemic is the country’s most serious healthcare crisis to date.
He added that the country must learn from the “obvious shortcomings exposed” and focus on handling any future crises. Xi said:
“First, [we must] resolutely curb the spread of epidemic … Increase the rate of treatment and cure, and reduce the infection and death rates effectively in Hubei and Wuhan”.
Wuhan city also called the Detroit of China, is home to some of the largest automobile manufacturers in the country. Global companies are facing a serious shortage of supplies at this point as the situation goes from bad to worse. Besides, as the fears of major devaluation in Yuan escalate, Chinese exporters have been increasingly hoarding the USD. Speaking to CNBC, Jonathan Pain, author of The Pain Report, said:
“I’ve now come to the view that equity markets, global equity markets, have to reprice to take into account or fully discount the dramatic economic impact that all of this is going to have.”
“I believe that repricing … has just started and I think it’s gonna be approximately 20 to 25% in the next month or so”, added he.