(CNN) — Stock markets are falling around the world after the number of coronavirus cases surged in Italy and South Korea, putting two more major economies at risk from a virus that has already caused widespread disruption in China.
The Dow plunged as much as 997 points when US markets opened on Monday. The S&P 500 fell 3.1%, and the Nasdaq lost 3.9%. The VIX, a measure of market volatility, shot up 40%.
The losses South Korea’s Kospi index closed down nearly 3.9% on Monday, its worst day since October 2018, after coronavirus cases in the country surged past 800. In Italy, the main market index was down more than 4.5% after the number of cases there topped 200 — including five deaths — and authorities started shutting down public buildings, schools and sports events in parts of the country.
A growing number of companies are warning that the coronavirus will prevent them from meeting sales or profit targets for the first three months of the year. Reduced demand for goods and services, and factory closures in China, are also expected to knock the global economy and weigh on trade at a time when Japan and Germany are already teetering on the brink of recession.
The stock market reaction to the outbreak had so far been muted. But the spike in the number of cases in Italy and South Korea, the world’s eighth and twelfth largest economies, raises fears of a pandemic and ups the stakes for businesses and investors.
On Monday, investors across much of the developed world sold stocks and rushed into safe haven assets such as gold. The United Kingdom’s FTSE 100 dropped 3.3% in early trading and Germany’s DAX shed more than 3.5%. In France, the CAC 40 dipped 3.7%.
In Asia, Hong Kong’s Hang Seng dropped 1.8%, while China’s Shanghai Composite fell 0.3%.
Oil prices tumbled, too, on fears that reduced economic activity will hit demand for energy. US futures fell 3.6% to trade at $51.47 per barrel. Brent crude, the global oil benchmark, also lost about 3.6% and was last trading at $56.37 per barrel. Shanghai crude futures, China’s oil benchmark, sank 4% to 400 yuan ($56.91) per barrel.
Investors meanwhile piled into gold, sending prices up 2.6%. The Swiss franc, another traditional safe haven, strengthened against the US dollar.
Coronavirus-related deaths have risen to more than 2,620 worldwide, with over 30 outside of mainland China. There are at least 79,300 confirmed cases globally.
Italian authorities have announced sweeping closures in the country’s north as they scramble to contain Europe’s biggest outbreak. Italy’s confirmed cases surged from three on Friday morning to more than 150 on Sunday. The outbreak is the biggest so far outside Asia.