AFLYY Air France ADS (PK)

By Chitra Somayaji and Anna Hirtenstein 

Shares of airlines and travel companies around the world plunged Monday, led by cruise-line Carnival Corp. and easyJet PLC, on speculation that authorities may crack down on movement after the biggest outbreak of coronavirus outside Asia emerged in Italy.

Carnival, which operates 10 cruise brands, was the biggest loser in the S&P 500, dropping 9.5%. Norwegian Cruise Line Holdings Ltd. declined 9.4%, Royal Caribbean Cruises Ltd. fell 9% and American Airlines Group Inc. was down 8.6%.

In Europe, easyJet shares plummeted 16.9%, their biggest drop since the U.K. voted to leave the EU in June 2016. The decline made the U.K. airline the worst performer in the pan-continental Stoxx Europe 600 index. Ryanair slid 13.5%, while Air France tumbled 8.7% and Deutsche Lufthansa lost 8.8%.

The declines came amid a broader selloff in global markets, with oil prices and stocks around the world retreating sharply as new pockets of the coronavirus infection came to light in South Korea, Italy and Iran.

That has sharpened anxieties about the global economic impact of the outbreak, which already shows signs of curtailing manufacturing and consumption in China, the world's second-biggest economy.

"The coronavirus numbers increasing so much in Italy and in the Middle East has given concerns that maybe this will take much more time to contain than first expected," said Henrik Drusebjerg, chief strategist at Danske Bank Wealth Management.

"Investors now fear that this is not just a Q1 thing, it could easily also be in Q2 and Q3 and the overall growth impact will be much more severe than first thought. This hits companies with the most global exposure, such as airlines and travel."

The pace of the coronavirus spread was previously thought to be slowing, but a change in the way the disease is diagnosed resulted in a sharp increase in cases. Roughly 200 people have been infected by the virus in Italy, which reported a sixth death from the pathogen on Monday, in a crisis that is likely to test Europe's open borders and easy travel in coming weeks. Authorities imposed quarantines and other restrictions in Italy's economic heartland, and officials in other regions are banning or restricting activities in an attempt to limit new infections.

"Italy's lockdown, as the country tries to control the worst outbreak of the virus in Europe, has caused investors to panic about how business and society will be affected," analysts at AJ Bell said in a note. The drop in travel stocks suggests that "investors are fearful that consumers and business people may lose their appetite to travel."

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

February 24, 2020 16:57 ET (21:57 GMT)

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