Dow Jones Opens the Week 600 Points Lower As Coronavirus Spreads to Italy

Global markets opened the week in red on the increased fears of the coronavirus outbreak spreading to Europe after five death cases were confirmed in northern Italy. Dow Jones opened in New York today 600 points lower, while in the meantime adding further 300 points to the initial gap lower.

Fundamental analysis: Italy colors the markets red

Day by day the investors are looking more concerned about the overall impact of the coronavirus outbreak on the global economy and corporate profits. Despite the fact that the outbreak appears to have slowed down in China, in the context of deaths and infections, the news over the weekend suggests that Europe may be next in line.

South Korea raised its warning level to the highest level, while an employee of the tech giant Samsung was diagnosed with coronavirus on Saturday.

Italy is so far the first European country to engage in a major battle with a potential virus outbreak as it was forced to lock down several towns, which are home to around 50,000 residents.

As far as industries are concerned, the shares of major airlines took a major hit today. Delta Air Lines stock price is down nearly 7%, American Airlines around 8%, and shares of United are down around 4%.

In Europe, shares of the German giant Lufthansa are down 8.5% while its French counterpart KLM lost more than 10% today. One of the worst performers today is EasyJet, a British low-cost airline, which shed 15% so far.

Technical analysis: Dow Jones hits multi-week lows

Dow Jones (DJI) opened 600 points lower while, in the meantime, losing another 250 points to round the loss to nearly 3%. As seen in the chart below, the price action stopped around the $28000 handle, in the area where the 200-DMA currently trades.

The intra-week support lies at $27700 where two support lines intersect. If broken, the 100-DMA trades at $27200 to further support the price.

Compared to February 12th, when DJI printed an all-time high, the market is currently trading around 5% lower.

Summary

Global markets are all trading in red today on the increased fears of further coronavirus outbreak in Europe, after Italy reported a total five of death cases. Dow Jones trades around 3% lower as investors prepare for a worse-than-expected scenario concerning global economy and corporate profits.