• Global markets are reeling from coronavirus, as sharemarkets around the world selloff sharply.
• As cases in South Korea spiked, fear appears to have returned to the market, with the ASX falling 2.25% on Monday and losing another 2.2% in early trading on Tuesday.
• The Australian dollar meanwhile is buying just 66 US cents, with Commonwealth Bank FX strategist Kim Mundy suggesting it could go much lower if data shows Chinese economy has slowed down more in February than expected.
• Visit Business Insider Australia’s homepage for more stories.

The ASX is in for another horror day.

As global markets reel from the coronavirus, investors look to be again getting ready to pile out of the local sharemarket again.

On Tuesday morning the Australian Securities Exchange (ASX) had lost around 160 points, or around 2.2%, 20 minutes after the opening bell. It follows on from Monday, the worst day on the local market in around four months, plunging about 2.25%.

Overnight things weren’t much better overseas. More than 1000 points were wiped from the Dow Jones in the US, or more than 3.5%. European markets were consistent with Wall Street, with the FTSE falling 3.35% and Germany’s DAX dropping more than 4%.

Travel and tech companies were hit particularly hard, as both Apple and Microsoft shed the better part of 5%. So-called ‘safe haven assets’ meanwhile rallied with gold spiking to more than $2,500 AUD an ounce – helped somewhat by the fact the Australian dollar is trading at around 66 US cents – one of its lowest points since the GFC.

It could get worse as well for Australia, with its dependence on China’s economy, if the outbreak continues unabated, according to Commonwealth Bank currency strategist Kim Mundy.

“The jump in cases outside of China raises the risk of a sharper first quarter 2020 global economic slowdown. It also raises the risk that the economic disruption is more prolonged,” she said in a research note.

“Both the Australian dollar and the New Zealand dollar risk sharp falls if ‘hard’ Chinese economic data show Chinese economic activity slowed more in February than market participants are expecting.”

The sell-off was sparked over the weekend with a spike of new cases in South Korea, and a spattering in Iran and Italy, according to foreign exchange company OANDA.

“The confidence of optimists predicting a V-shaped recovery in the global economy post coronavirus, took a hit on Friday, with equities and energy tanking, and a notable rush into haven assets,” OANDA Asia-Pacific senior market analyst Jeffrey Halley wrote in a note issued to Business Insider Australia.

“A biological whack-a-mole scenario, where the pathogen is managed in one location, only to pop up in another, is somewhat of a nightmare scenario. Next week’s PMI data from around the globe will give investors the first real insight into the hit to economic activity across the world from coronavirus.”

Striking right before earnings season, the coronavirus has smacked companies with any exposure to China. Vitamins company Blackmores reported its profits nearly halving over the quarter, while corporate travel company Serko also took a hit as companies limited unnecessary employee travel during the outbreak.

With the potential for more worrying results later this week, the sell-off might still have some way to run yet.

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