The S&P/ASX 200 index looks set to tumble lower on Friday after coronavirus concerns weighed heavily on global share markets.
Here is a snapshot of how a number of major indices fared overnight:
- Germany's DAX fell 3.2% to 12,367.46 points.
- London's FTSE dropped 3.5% to 6,796.4 points.
- The Dow Jones tumbled 4.4% or 1,190 points to 25,766.64 points.
- The S&P 500 fell 4.4% to 2,978.76 points.
- The Nasdaq dropped 4.6% to 8,566.48 points.
Why did global markets drop lower?
Investors were selling shares overnight amid concerns that the coronavirus may be spreading throughout Europe and in the United States. Experts fear this could have a major negative impact on global economic growth this year.
According to CNBC, Thursday night's losses mean the Dow Jones, S&P 500 and Nasdaq are now in correction territory. This is when an index is down more than 10% from a recent high.
The pace at which this has happened is what has caught many by surprise. It has taken the Dow Jones just 10 sessions to fall from its all-time high into a correction. Whereas the S&P 500 and Nasdaq indices were trading at record highs just last week.
Though, it is worth remembering just how extraordinary their performances were in 2019. For example, even after its recent declines, the Nasdaq index is still up over 13% over the last 12 months.
What does this mean for the S&P/ASX 200 index?
The local market looks set to follow the lead of European and U.S. markets on Friday.
According to the latest SPI futures, the ASX 200 is expected to open the day 164 points or 2.5% lower this morning at 6493.9 points.
Based on what we have seen overseas, this looks set to be broad selloff. Which means shares as diverse as Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS), and Afterpay Ltd (ASX: APT) are all likely to trade lower this morning.
When the market volatility eventually subsides, which it will in time, there certainly could be a few bargain buys out there.
