On Monday, fears that the coronavirus outbreak in China will grow into a pandemic with disruptive and deadly consequences for countries across the globe spooked most equity markets. The virus, which has killed 2,442 people in China, has reportedly spread to 28 other countries now, with a death toll of nearly two dozen. Infections and deaths, according to reports, have risen in South Korea, Italy and the Middle East.
The Dow Jones Industrials fell more than 800 points within minutes of the market open on Monday as investors scurried to safer assets after a surge in coronavirus cases outside China stoked fears of a bigger impact to global growth.
The benchmark S&P 500 fell below its 50-day moving average, while the blue-chip Dow slipped below its 100-day moving average, all closely watched indicators of momentum.
The Dow Jones Industrial Average fell 589.48 points, or 2.03%, at the open to 28,402.93.
The S&P 500 opened lower by 80.14 points, or 2.40%, at 3,257.61. The Nasdaq Composite dropped 388.15 points, or 4.05%, to 9,188.44 at the opening bell.
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc on Monday called the coronavirus outbreak “scary stuff” but said that it was no time to sell stocks despite the threat of a pandemic.
Speaking on CNBC, Buffett said investors with a 10- to 20-year time horizon and focused on companies’ earnings power will fare well in stocks, and that the outbreak has “not changed” his long-term outlook.
“It is scary stuff,” Buffett said. “I don’t think it should affect what you do in stocks.”
Buffett, however, said long-term investors should not get caught up in daily headlines, and that Berkshire would “certainly be more inclined” to buy stocks than on Friday.
“If you look at the present situation,” he said, “you get more for your money in stocks than bonds.”
Many of the roughly 1,000 Dairy Queens in China are closed, while those that are open “aren’t doing any business to speak of,” Buffett said, while Johns Manville insulation and Shaw carpeting have seen supply chain disruptions.
“There’s always trouble coming,” he said. “The real question is where are those businesses going to be in five or 10 years.”
Nikkei futures tumbled 2.7 per cent, EuroStoxx 50 futures declined about 2 per cent while futures for London’s FTSE skidded 1.3 per cent. Asian shares were also a sea of red. Back home, the S&P BSE Sensex plunged 807 points, or nearly 2 per cent, to settle at 40,363 levels. On the NSE, the benchmark Nifty lost 251 points or over 2 per cent to end the session at 11,829 levels. Volatility index India VIX jumped 26 per cent to 17.21 levels.