Market News & Analysis
Virus spread in Europe hits stocks, boosts gold
Fiona Cincotta February 24, 2020 6:04 PM
The spread of the coronavirus, rather than abating, is now intensifying outside of China and it is beginning to take its toll in Europe. Austria is considering closing its border with Italy which could be just the first move of many given that the number of infected cases in the country rose to 153. Italy has a land border with Austria, Switzerland, France and Slovenia and if the virus spreads in the north of the country it could be a matter of a short time before those borders are either closed or the virus spreads into the neighbouring regions.
The euro is losing ground to the dollar as investors try to assess the potential damage the virus could cause to the European economy if its spread here intensifies. The Eurozone is already fragile and any green shoots of recovery would be squashed if the virus takes hold on the continent.
European stocks are not reacting well – the dashboard for European indexes is a sea of red with the FTSE down 3.12% and the Euro Stoxx 50 declining 3.5%. In London the worst affected stocks are airlines and travel operators which have been hit not only by Covid-19 but also by weather-related cancellations caused by a sandstorm in the Canaries.
A warning from Primark-owner AB Foods about China virus-related supply chain disruptions made it clear to investors that hardly any industry will be spared from the toxic effect of the disease.
One of the few gainers is UK gold miner Polymetal international as worried investors shift their assets into safe-havens such as gold and silver.
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