Stocks fell again on Tuesday, and bond yields fell to record levels, one day after concerns that the spread of the Coruna virus would affect global growth, sending Wall Street down in two years.
Investors in the United States and abroad are trying to measure the spread of the Corona virus and its potential impact on the world economy.
Since they faced evidence of the outbreak spreading out of China, these traders reacted on Monday by pushing the S&P 500 index down by 3.4 percent, its worst one-day performance since February 2018. European markets recorded their worst session since 2016 .
On Tuesday, selling in stocks continued. The S&P 500 fell more than 1 percent and stocks fell in Europe and Asia.
The bond market continued to reflect broad-based concerns that growth would weaken, and 10-year Treasury yields fell to 1.33 percent, a record low below the 1.36 percent level seen last July 2016.
Investors could face more land trips as coronavirus outbreaks spread, hampering consumer demand and plentiful supply chains worldwide. UBS Bank said on Tuesday it was recommending investors to move to emerging market stocks, and warned that keeping shares in European companies posed a particular risk.
“The emergence of a large number of new cases in Italy has significantly increased the risk of a sharp drop in consumer and business confidence in Europe, and perhaps in North America as well if more cases are confirmed there in the coming days,” Mark Hefel said, chief investment officer at UBS Global Wealth Management Operations, in the investment report.
President Trump, who traveled to New Delhi on Tuesday, joked with business leaders that their investments in the United States had made them a lot of money “except for yesterday,” noting the market was down, according to a combined report. Regarding the outbreak of the Corona virus, he said, “We think we are doing very well in the United States.”
Virus outbreaks in Europe, Asia and the Middle East renew fears of an upcoming global pandemic. In recent days, market analysts have issued new warnings that the outbreak of the disease may lead to a decline in economies worldwide.
Economists at JPMorgan Chase wrote that they expect global growth to slow to an annual pace of 1 percent in the first three months of the year, which will be the weakest quarter of the economic expansion now more than a decade away. In the United States, the overall estimate of domestic growth declined in the first quarter.
Officials within the Federal Reserve and within the Trump administration are closely monitoring the coronary virus status, although the central bank’s main tool for fueling growth – lowering interest rates – may not help much if factories do not produce goods and supply chains are disrupted by quarantine.
In Europe, Germany Dax And Britain’s FTSE 100 fell more than 1 percent.
Stocks fell in most markets in Asia, led by Japan, which closed for a holiday on Monday. The Nikkei 225 fell more than 3.3 percent. Most other Asian markets fell at a much slower pace.
In China, the Shanghai Stock Exchange fell 0.6 percent, while the Shenzhen City market rose by about half a percent.
Both markets were somewhat isolated from global selling on Monday, a measure which analysts attributed to Beijing’s policies such as issuing orders to fund managers not to sell more stocks than to buy. Beijing has a history of tolerating falling stock prices more easily if they appear to echoes Wall Street activity, and this appears to be true also on Tuesday.
Hong Kong was little changed after falling more than mainland markets on Monday.
In South Korea, which was rocked by the second largest spread of the virus in the world outside China, stock prices returned to rise on Tuesday morning after enduring one of the largest declines in any major market around the world the day before. And they ended up 1.2 percent.
Stock markets in commodity-exporting countries are still suffering losses, as traders fear that demand for their commodities may decline if more countries suffer from this type of severe slowdown in economic activity that China has endured. The Australian share market fell 1.6 percent on Tuesday.
Matt Phillips and Gina Smialek contributed to the reporting.