NEW YORK (Reuters) – Stocks across the globe posted their largest decline in over two years on Monday and oil prices tumbled 5% as a jump in coronavirus cases outside of China sent investors scrambling to the security of gold and government bonds on fears of the impact to the global economy.

Spot gold prices rose for a fifth session and to a 7-year high while the U.S. 30-year Treasury bond yield set a record low.

Despite the spike in coronavirus cases reported in Italy, South Korea and Iran, the head of the World Health Organization said that “using the word ‘pandemic’ now does not fit the facts but may certainly cause fear.”

“We must focus on containment while preparing for a potential pandemic,” Tedros Adhanom Ghebreyesus told reporters in Geneva, adding that the world was not witnessing an uncontained spread or large-scale deaths.

Concerns over the hit to economic growth and uncertainty over the stress to supply chains triggered selling in stocks and other high-risk assets.

“It is not as though the numbers have changed dramatically; but what has changed is the geography, which adds a new level of concern,” said Art Hogan, chief market strategist at National Securities in New York.

“What the market is trying to predict here is ‘How large will this get globally, and when will it start to peak?’”

At midday, the Dow Jones Industrial Average fell 919.31 points, or 3.17%, to 28,073.1, the S&P 500 lost 102.59 points, or 3.07%, to 3,235.16 and the Nasdaq Composite dropped 337.09 points, or 3.52%, to 9,239.50.

The pan-European FTSEurofirst 300 index lost 3.76%, with Milan’s stock market down more than 5% after a spike in cases of the virus left six dead in Italy and parts of the country’s industrial north in virtual lockdown. [.EU]

MSCI’s gauge of stocks across the globe shed 2.82%, its biggest single-day decline since Feb. 5, 2018, when concerns over a spike in inflation sent stocks tumbling.

Emerging market stocks lost 2.71%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.58% lower, while Japan’s markets were closed for a holiday.

“Everybody sees that this could be another leg down for the economy, and we were already in quite a fragile state to begin with,” said Elwin de Groot, Rabobank’s head of macro strategy. “It could be another step toward a recession in more countries.”

In Asia overnight, South Korea’s KOSPI slumped 3.9% after the government declared a high alert.

The virus has now killed nearly 2,500 people in China, which has reported some 77,000 cases, and spread to 29 other countries and territories, with a death toll outside of China around two dozen, according to a Reuters tally.

Iran, which announced its first infections last week, said it had confirmed 43 cases and eight deaths, with most cases in the holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.

“The idea that the coronavirus has been fully contained has been firmly banished,” said Chris Beauchamp, chief market analyst at IG. “This means the economic forecasts of the impact, such as they are, will need to be revised, with a greater impact now to be expected.”

SURGE TO SAFETY

U.S. fed fund futures <0#FF:> signaled more rate cuts later this year and a near 20% chance of a cut next month.

Benchmark 10-year notes last rose a full point in price to yield 1.3638%, down from 1.47% late on Friday. The 30-year bond touched a record low yield of 1.812.

In currency markets the Japanese yen strengthened 1.02% to 110.46 per dollar.

The dollar index fell 0.236%, with the euro up 0.17% to $1.0861.

“Ultimately this is all a risk-off trade,” said Marvin Loh, senior global markets strategist at State Street Global Markets.

“When you look at the yen, when you look at the Swissie, when you look at rates, it is risk-off. It’s probably reflective, to a certain degree, of the market being a little too sanguine up until now … so there’s an adjustment process around it.”

Korea’s won was down 1% at 1,219.06 after falling to its weakest since August 2019. Emerging-market currencies, from Mexico’s peso and Turkey’s lira to Poland’s zloty and Russia’s ruble, were all in the red.

In commodity markets, U.S. crude fell 4.93% to $50.75 per barrel and Brent was last at $55.43, down 5.25% on the day.

Among the main industrial metals, copper lost 1.04% to $5,705.00 a tonne. [MET/L]

“As the virus spreads globally, additional downside revisions in oil demand for this year may be required,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

“The accelerated sell-off in the stock market has become difficult for the oil market to ignore,” he said.

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