Dow falls over 1100 points as coronavirus fears rise

The Dow Jones and the S&P 500 are likely to suffer their worst week since the 2008 financial crisis as investors concerns about the coronavirus outbreak rise.

On Thursday, the Dow Jones closed 1162 points lower, with the benchmark down more than 3100 points since the start of the week. Meanwhile, the S&P 500 closed 139 points lower on Thursday, with both indices down more than 10% this week.

US stocks are still far off from being labelled a bear market, which is defined as a 20% or more fall in value below the most recent peak.

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Outside the US, the FTSE 100 continues to slide with the blue-chip index down 300 points in early morning trading on Friday, representing a decline of more than 10% since the start of the week.

Global equities have traded lower over the last five days, with investors growing increasingly concerned about the spread of the coronavirus.

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Safe haven investments surge amid sell-off

Safe haven investments like bonds continue to surge in value, with the 10-year US Treasury bond yield falling to a new all-time low of under 1.28%, sending its price higher.

Meanwhile, analysts from Bank of America (BoA) believe that gold prices could rally as high as $2000 an ounce. However, BoA opted to leave their official target price unchanged at $1700.

Gold is trading at $1629 at the time of publication.

‘It is worth keeping in mind that our bullish base case outlook is not necessarily predicated on the Wuhan virus,’ Michael Widmer precious metals analyst at Bank of America Securities said. ‘Indeed, we believe that the yellow metal is supported by several structural, i.e., longer-term, dynamics.’

In his opinion factors outside of the coronavirus, particularly a ‘de-globalisation’ movement, will continue to weigh on global economic growth and help support gold prices.