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Home / US Business / Stocks set to decline when oil falls below $ 60 by mounting virus fears

Stocks set to decline when oil falls below $ 60 by mounting virus fears



European stocks were set to fall sharply while oil came under pressure after China warned the spread of a deadly coronavirus would accelerate, underscoring concerns about the pathogen's potential impact on the country's economy.

Futures trading pointed to a decline of around 1 per cent freely in Europe, with a similar decline seen over the major bourses.

Japan's Topix, one of the only major regional stock indices that traded on Monday, fell 1.6 percent. Markets in China and Hong Kong were closed during the New Year holiday moon. S&P 500 futures pointed to a loss of just over 1

percent as Wall Street begins trading later in the day.

Brent crude, the international benchmark index, fell 2.2 percent to $ 59.35 a barrel, and has previously fallen more than 3 percent to its lowest level in nearly three months.

China's leaders support a blow to economic growth in the first quarter as the virus weighs on consumption and travels during the new lunar new year, threatening to hit production.

"The progress of the coronavirus will be the overwhelming key to short term as more and more concerns rise to the surface," said Jim Reid, a strategist at Deutsche Bank.

Beijing confirmed on Monday that 80 people had died as a result of respiratory disease , while 2,744 were infected. The escalating public health crisis caused the government to extend the lunar New Year holiday by another three days to next week in an attempt to contain the outbreak.

Investors responded to pile up in ports, with gold rising 0.5 percent to $ 1,578 per ounce The return on 10-year US government bonds, which are reversed to prices, fell three basis points to 1.6528 percent Japan's yen strengthened short of $ 109 to the dollar, China's exchange rate offshore yuan weakened 0.6 per cent to R.96,664 per dollar.

Iron ore futures, closely linked to expectations of China's economic growth, fell as much as 6.6 percent to $ 85 per tonne.

The fall in oil prices also came despite reports that the US embassy in Iraq had been hit by a missile attack over the weekend. Saudi Arabia's energy minister on Sunday sought to downplay the corona virus's impact on oil demand.

Concerns over the outbreak's impact on global travel – a key source of crude oil demand – offset geopolitical tensions in the Middle East, said Stephen Innes, chief of Asia's market strategist at brokerage Axicorp.

"Unless there is a significant impact on the flow of oil from the Middle East, the geopolitical risk fades fairly quickly," Innes said. But he added, "I'm not sure how much this [fall] can run… We have praised the haircut mostly from the impact of travel from Chinese tourism."

Ctrip, China's largest travel reservation website, said on Monday that The outbreak had "impacted travel plans" in the country, adding that 37 global airlines and 10 hotel brands would offer free reimbursement to customers who had booked travel and vacations until early February.


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