Amid mounting fears about a fatal virus sweeping through China, global markets mostly took a dip on Tuesday — with Asian stocks shouldering the largest declines.
The Shanghai Composite Index today took its biggest drop in two months, down 1.4% at closing, while the Nikkei 225 in Japan fell by 0.9%. The Hang Seng Index in Hong Kong saw the sharpest decline among the Asian indexes, dropping by 2.8%.
As of 1 p.m. ET, U.S. benchmarks were about flat: The Dow Jones was down .08%, the S&P 500 fell by .02% and the Nasdaq Composite was up .5%.
Asian currencies have also dropped in relation to the U.S. dollar: the Chinese yuan dipped by 0.6%, the South Korean won fell 0.7% and the Taiwan dollar slid by 0.2% in comparison to the greenback.
First detected in the central Chinese city Wuhan last month, the coronavirus causes pneumonia-like symptoms. So far, six people are dead and more than 300 infected, authorities said today, with cases reported outside China in Japan, Thailand and South Korea. China’s National Health Commission confirmed Monday that the disease could spread between humans, and the World Health Organization is slated to meet tomorrow to determine whether to declare an international public health emergency.
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Compounding fears of the coronavirus are the mass travels expected to occur this weekend for the Lunar New Year. Hundreds of millions of people are slated to travel throughout Asia this weekend in celebration of the holiday. In Wuhan, Lunar New Year festivities expected to attract hundreds of thousands have been canceled; Wuhan mayor Zhou Xianwang has advised that Wuhan residents try not to leave the city, and that outsiders not come in.
In particular, hotel, airline, retail and luxury goods stocks moved downward amid concerns about the potential spread of the coronavirus. In the fashion space, LVMH shares were trading down 2.5%, Kering shares fell by 4.1% and Burberry stock slid by 3.3%. Meanwhile, stock in face mask and pharmaceutical providers ticked upward, with several pharma stocks in China (Shanghai Kehua Bio-Engineering, Shandong Lukang Pharmaceutical) up by their 10% daily maximum.
Should the virus continue to spread, it remains to be seen if the luxury sector could take a hit. At present, the Chinese market accounts for a significant portion of all sales in the sector. According to Bain & Co., Chinese shoppers represent 35% of global luxury goods sales — and they accounted for 90% of growth in the sector last year.
As China deals with the coronavirus outbreak, Hong Kong, a semi-autonomous region of the country, continues to face ongoing anti-government protests — which have resulted in an economic recession due in part to decreased tourism and slumping retail sales. Hong Kong’s retail industry saw sales plummet 23.6% in November, for the 10th consecutive month of declines, according to government data, and the Hong Kong Retail Management Association expects around 5,600 workers to be laid off amid cutbacks and store closings.
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