Virus outbreak chills markets, outlook for global economy

Virus outbreak chills markets, outlook for global economy


FRANKFURT, Germany (AP) — The widening coronavirus outbreak threatens to seriously disrupt the global economy just as it was steadying itself against headwinds from the U.S.-China trade dispute.

Stocks fell sharply on Monday around the world on news of more infections in different countries. The U.S. Dow Jones was down more than 900 points during mid-day trading, while in Europe, the pan-European Stoxx 600 dipped 3.6 percent amid fears about the first major outbreak on the Continent, an eruption of cases in Italy. Cases were also reported in new countries in the Middle East.

Concerns are high in Europe, where the three largest economies are already scraping along at the edge of recession, with Germany particularly exposed. China, the epicenter of the crisis, is a major sales market for German automobiles and serves as a source of parts for Germany's own factories.

The global economy was just stabilizing after wobbles caused by the trade war between the U.S. and China and fears of a disorderly British exit from the European Union. The coronavirus hit just as a U.S.-China preliminary deal and a Britain-EU agreement on a transition period had boosted hopes for a modest upswing, particularly in Europe.

Now the world economy could see its first quarterly fall in seasonally adjusted output since the global financial crisisof more than a decade ago, says Ben May, director of global macro research at Oxford Economics.

Frequent business and tourism destinations for people from China are already being hit hard, confirming that this will be a key way that the pain will spread to other Asian economies, with Singapore and Hong Kong feeling the effects.

Comparisons to the 2003 SARS epidemic, another deadly outbreak that originated in China, aren't reassuring because China's...

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