[New York Close] Fear Triggers 'Collapse'... Safe-Haven Assets Like Bonds and Gold Rally

[Asia Economy New York=Correspondent Baek Jong-min] The US stock market collapsed weakly due to fears of the novel coronavirus. As buying surged in safe-haven assets, US Treasury bonds and gold prices showed strength.

At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 28,535.80, down 453.93 points (1.57%) from the previous trading day. The S&P 500 index fell 51.84 points (1.57%) to 3,243.63, and the Nasdaq index ended down 175.60 points (1.89%) at 9,139.31.

The Dow and S&P 500 posted their largest declines since October last year. It was also the first time since August last year that the Dow fell for five consecutive trading days. While the stock market was indifferent even on the day the US House of Representatives decided to impeach President Donald Trump last year, it could not withstand the attack of the virus. Morgan Stanley analyzed that the stock market, which had surged sharply without significant corrections since last October, has entered a correction phase.

By sector, travel-related stocks took a severe hit. Amid concerns over reduced travel demand, airline stocks plunged: American Airlines fell 5.54%, Delta Air Lines 3.37%, and United Airlines 5.21%. Hotel stocks such as Sands, Wynn Resorts, MGM, and Marriott also joined the downward trend.

US Treasury prices, a representative safe-haven asset, showed strength. The yield on 10-year US Treasury bonds fell to 1.60%, marking the lowest level since October 10 last year. A decline in bond yields indicates a rise in bond prices. The Japanese yen, also classified as a safe-haven asset, strengthened against the US dollar.

Gold prices on the New York Commodity Exchange rose 0.4% ($5.50) to $1,577.40 per ounce, reaching the highest level in about six years since April 2013.

Crude oil prices, which are feared to decline due to reduced demand from economic downturn caused by the coronavirus spread, have been falling continuously. On the New York Mercantile Exchange (NYMEX), March delivery West Texas Intermediate (WTI) crude oil closed at $53.14 per barrel, down 1.9% ($1.05) from the previous trading day. This is the lowest level in about three months since October 15 last year, raising concerns about breaking below the $50 level.

On the day, Mohamed Al-Kaabi, chairman of the Organization of the Petroleum Exporting Countries (OPEC), said, "The impact of the novel coronavirus on oil demand will be limited," but it was insufficient to stop the decline in oil prices.