LONDON: Global stock markets tumbled and government bonds rallied on Friday as disruptions to business from the spreading coronavirus epidemic worsened, stoking fears of a prolonged economic slowdown.
Yields on U.S. Treasuries fell to record lows and Treasury futures jumped as investors increased bets the Federal Reserve will follow this week's surprise rate cut with further easing.The yield on benchmark 10-year Treasury notes fell to a record low of 0.6950per cent on Friday. The two-year equivalent fell to 0.4510per cent.
"The interplay of virus containment fears and stimulus measures means that in the near term we expect market volatility to persist," said Mark Haefele, chief investment officer at UBS Global Wealth Management. The flu-like virus emerged late last year in central China and has since spread to more than 80 countries. More than 3,000 people have died. Travel restrictions and factory closings aimed at curbing the spread of the virus are expected to pressure global growth.
Shares in China fell 1.22per cent. Stocks in Hong Kong , another city hard hit by the virus, fell 2.12per cent. "The driver is the equity markets and the collapse in U.S. bond yields this week," said Kenneth Broux, FX strategist at Societe Generale.