Virus fears send Wall Street down

UK market slides as finance minister Sajid Javid quits

February 14, 2020 05:47 AM

Renewed concerns over the virus epidemic in China sent Wall Street into the red on Thursday, while London's stock market slid after UK finance minister Sajid Javid abruptly quit Prime Minister Boris Johnson's government.

In a reversal from a day prior when Wall Street closed at record highs, all three major US indices ended down, with traders pointing the finger at gloomy news from China.

After Chinese authorities changed the way they count infections from the coronavirus -- officially named COVID-19 -- the nationwide death toll from the outbreak in the world's second-largest economy jumped to 1,355 and the infection count to nearly 60,000.

Japan also reported its first death, while Vietnam placed some 10,000 people under quarantine after six COVID-19 cases were discovered in a cluster of villages.

"There is a lot of uncertainties around the coronavirus. I don't think anyone really knows the severity or the potential escalation or de-escalation of it," said Nate Thooft of Manulife Asset Management.

China has been praised by the World Health Organization (WHO) for its transparent handling of the outbreak.

There is, however, still scepticism among the global public, with suggestions that Beijing may be concealing the scale of the problem the way it did during the 2002-2003 SARS epidemic.

Senior White House official Larry Kudlow said that the US was "a little disappointed in the lack of transparency" from China, which he said had refused American help.

The US Treasury on Thursday sold bonds at record-low yields, as investors sought safety from the virus's uncertainty.

Markets were also down in Asia where Tokyo stocks slid 0.1 percent, Hong Kong lost 0.3 percent and Shanghai 0.7 percent.

In Britain, Javid's resignation sent London's benchmark FTSE 100 index down at the close one percent as other major European markets posted narrower losses over fears about the epidemic's global economic impact.

Britain's Chancellor of the Exchequer Sajid Javid walks at 10 Downing Street in central London on February 13, 2020, a day before he resigned.

"The news caught traders by surprise. Sterling has the biggest reaction to the news -- it initially sold-off, but it since recovered all the lost ground and is now back above the pre-announcement level," CMC Markets UK analyst David Madden told AFP.

Javid's resignation came just two weeks after Brexit and a month before he had been due to deliver his first annual budget on behalf of Johnson's Conservative administration.

US results were dragged down by poor performance from firms like Cisco, which dropped 5.2 percent after it reported a four percent decline in year-on-year revenue in the fourth quarter.

United Airlines and American Airlines, which both halted flights to China due to the outbreak, saw their shares decline by about 1.2 percent.

But Tesla gained nearly five percent after announcing a $2 billion stock offering to raise funds and avoid a cash crunch after it shuttered its Shanghai plant due to the epidemic.

In data news, the US Labor Department also reported uptick inflation in January, with the Consumer Price Index jumping to 2.5 percent over the last 12 months, the fastest pace in 15 months.