Stocks fall on fears China virus to slow growth, gold gains

NEW YORK (Reuters) – Global equity markets and government debt yields slumped on Friday as nagging concerns about the impact of the coronavirus on global growth overshadowed a strong U.S. jobs report that indicated an economy on pace to grow moderately.

FILE PHOTO – An investor sits next to a stock quotation board at a brokerage office in Beijing, China January 3, 2020. REUTERS/Jason Lee

Stocks on Wall Street retreated from record highs and safe-havens gold and the Japanese yen rose as investors weighed how much the virus is likely to disrupt supply chains. China accounts for about one-third of global growth.

The better-than-expected U.S. labor report failed to move the market as often occurs. Caution about the virus, which has inflicted 31,211 people and left 637 dead, dictated investor sentiment.

Non-farm payrolls increased by 225,000 jobs in January, with employment at construction sites increasing by the most in a year amid milder-than-normal temperatures, the Labor Department said.

“Investors should be watching the effect of the coronavirus on the global supply chain and thus, on the global economy and corporate profits,” said John Vail, chief global strategist at Nikko Asset Management.

While the amount and duration of the effect remains unknown, there is a chance the Phase 1 U.S.-China trade deal will be severely hampered and bilateral relations worsen again, he said.

Global supply chains have grown far more integrated, so disruptions from China have bigger ripple effects around the world, said Ron Temple, head of U.S. equity at Lazard Asset Management in New York.

While the coronavirus will be disruptive, for long-term investors it may pose an entry point into equities, Temple said.

The economy is doing fine, the U.S.-Sino trade spat is on hold and there is no apparent catalyst for stock valuations to fall, he said.

“At the

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