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Stocks Slide as Virus Case Rise Heightens Concern

U.S. equity futures sank with Asian shares and gold surged Monday morning after the number of coronavirus cases outside of China increased and concern grew that global economic growth could take a more sustained hit.

Seoul saw the brunt of losses, down more than 3%, with declines also in Hong Kong, Sydney and Shanghai.

Weakness in S&P 500 Index and Euro Stoxx 50 futures also reflected the caution from traders to news over the weekend that finance chiefs and central bankers from the world’s largest economies see downside risks to the global economy persisting.

The Australian dollar chalked up a fresh 11-year low and the offshore yuan extended its recent slide. Crude oil tumbled more than 2.5%. Japan is shut for a holiday.

Investor sentiment is being knocked as South Korea saw a 20-fold increase in virus cases in five days and Italy canceled some public events after coronavirus infections rose to 140.

Treasury yields last week reached fresh lows and the recent retreat in global equities continues to show the defensive stance being adopted as new virus cases outside China lift anxiety levels.

“While the coronavirus is probably slowing in China, it is speeding up elsewhere,” said Charles Gillams, managing director at RJMG Asset Management Ltd.

“Its impact on Chinese business is already deep. So, whether that has a one economic quarter impact — of some severity — or is a bigger issue remains unclear and indeed we won’t know for while.”

Meantime, investors will also be scrutinizing new pledges of support in China amid signs some workers are returning to work. President Xi Jinping said authorities will step up policy adjustments to achieve the nation’s economic and social goals while fighting the virus outbreak.

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