Pandemic fears spreads, markets shed $3 trillion

On Thursday, with China’s coronavirus continuing to spread at its fastest pace outside China, shares continued to plunge downward wiping out more than $3 trillion in value in this week alone. U.S. Treasuries yields also hit their record lows on Thursday with investors fleeing to safe havens.

For the first time, the number of new coronavirus infections outside of China overtook fresh cases inside China raising fears of a global pandemic.

Dozens of European companies have already warned of potential damage to their profits because of China’s coronavirus. While the pan-European STOXX 600 index opened 2.3% lower, Italy’s blue-chip index touched a new low.

In the U.S., Microsoft became the second trillion-dollar company to warn about its revenues after Apple. Microsoft’s Frankfurt-listed shares were down 4%.

Global equities have fallen for six straight days with Wall Street’s fear gauge close to its late 2018 highs.

“Safe-haven currencies are doing very well and gold is heading back higher, and unless we see a slowdown in the coronavirus cases outside China, risk sentiment will continue to be undermined,” said Peter Kinsella, global head of FX strategy at UBP in London

Spot gold prices rose by 0.5% to $1,649 per ounce. The price of silver also rose by 1% to $18.03 an ounce. On Monday, gold prices hit its seven-year high of $1,688 per ounce.

Markets are pricing a 50% chance of the Federal Reserve cutting interest rates next month and have almost fully priced in a cut by April.

Analysts have downgraded forecasts for Chinese and global growth, and policymakers from Asia, Europe and the United States have begun to prepare for a steeper economic downturn.

Safe-haven currencies such as the Japanese yen and the Swiss franc gained on Thursday with the Japanese currency heading towards 110 yen to the dollar, up nearly 2% so far this week.

The greenback fell by 0.32%.

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