Gold Surges as Threat of Coronavirus Pandemic Spooks Markets

Stock markets in Europe opened sharply lower today following fears that the Coronavirus outbreak may be more widespread than previously thought, and could become a pandemic.

Milan’s main index was worst hit, falling more than 4%; London’s FTSE 100, Frankfurt’s Dax index and the Paris Cac-40 all fell more than 3% in early trading.

Italy has seen Europe’s worst outbreak of the coronavirus and the government has announced a series of drastic measures, with a lockdown in place in several small towns.

‘There has been so much complacency in recent weeks from investors’

In the UK, the three biggest fallers on the FTSE 100 were EasyJet, Tui and British Airways owner IAG, down 12%, 9% and 7% respectively; shares in airlines and travel firms have also been hit by the sandstorms in the Canary Islands .

Russ Mould, investment director at AJ Bell, told the BBC: ‘There has been so much complacency in recent weeks from investors, despite clear signs that China’s economy is facing a large hit and that supply chains around the world were being disrupted.

‘Markets initially wobbled in January, but had quickly bounced back, implying that investors didn’t see the coronavirus as a serious threat to corporate earnings. They may now be reappraising the situation.’

Meanwhile the price of gold has surged to its highest level in seven years as investors seek a safe place for their money.

Gold prices climbed more than 2% today to levels not seen since February 2013; the price for immediate delivery went as high as $1,678.58 an ounce before falling back slightly.