CORONAVIRUS fears weighed on global stock markets yesterday as investors headed for the exits even after China reported a big drop in new cases and eased borrowing costs to cushion the epidemic’s economic impact.

After powering to a record close the day before, traders fearing the virus could spread and harm the global economy, or simply capitalising on high prices to take profits, sent Wall Street into the red.

But Art Hogan of National Holdings said the drop on Wall Street “much more that we have not taken a pause for a bit. It’s healthy”.

“We’ve been up since October; we have not had two down days in a row in the S&P 500 yet this year,” Hogan said.

Meanwhile, vice-chair of the US Federal Reserve Richard Clarida said in an interview with CNBC the US economy has “solid fundamentals”. 

That echoed the upbeat findings of regional business surveys, and the Philadelphia Federal Reserve Bank’s manufacturing index released yesterday, which jumped to a three-year high.

However, he warned the virus, could have a “noticeable impact on Chinese growth” and potential hurt production elsewhere.

The world’s second-largest economy plays a key role in global supply chains, and investors are hoping central banks will do what is necessary to protect corporate earnings and economic growth.

The People’s Bank of China (PBoC) lowered prime rates for one-year and five-year loans, but the moves were “not nearly enough”, said Stephen Innes of AxiCorp.

The bank’s actions still helped the Shanghai stock market reach a 1.8% closing gain.

In Europe, stock markets were well down by the close, but London outperformed as a weakening pound gave a fillip to stock prices in the export sector.

Air France-KLM shares plunged after the airline reported that the coronavirus had blown a large hole in 2020 earnings to date while separately unveiling lower profits for 2019.

After European bourses shut, the International Air Transport Association said that worldwide airline revenue lost to the virus was projected at US$29.3 billion (RM123 billion), mostly in the Asia-Pacific region, especially in China.

The dollar rose against all its major rivals, with many analysts pointing to its safe haven status amid the coronavirus crisis. – AFP, February 21, 2020.