· On Wednesday the sell-off continued in Asian trading, with China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks dropping 0.8 per cent, erasing its gains for the year. Tokyo’s Topix fell 1.1 per cent, while in Seoul the Kospi index dropped 1 per cent. Hong Kong’s Hang Seng index dropped 0.8 per cent as the government announced a slew of stimulus measures to mitigate the impact of the outbreak in the city.
The US sell-off, which followed a bruising day on Monday, picked up steam in afternoon trading after a warning by the Centers for Disease Control and Prevention that the spread of the coronavirus was inevitable in the US.
Michael Arone, chief investment strategist at State Street Global Advisors, said investors increasingly believed the Federal Reserve would step in to shore up the US economy and fend off any negative impact on growth and earnings.
“Investors believe that [the coronavirus] has accelerated the Fed’s willingness to act,” he said. “History proves that central banks will often come in to help support markets at times of stress.”
The odds of a quarter-point reduction in the US central bank’s main policy rate at its June meeting have nearly doubled in the past month to 47 per cent, according to data compiled by the CME Group.
Prime Minister Shinzo Abe asked companies to adopt the new strategy after his cabinet on Tuesday approved an antivirus plan.
Italy warned that the EU should offer flexibility on its budget targets should the coronavirus outbreak in its industrialised northern regions have a prolonged impact on an economy already teetering on edge of a recession. The majority of cases were clustered in Lombardy and Veneto, regions which together make up a third of output for the eurozone’s third-largest economy and about half of its exports.
In Tenerife, authorities put a hotel with hundreds of guests and staff under quarantine after an Italian doctor staying there tested positive.
Switzerland also reported its first case, a pensioner who had visited Milan.
“The biggest objective of our response from this point should be to control the speed of the infection’s spread and minimise the number of deaths and people with severe symptoms,” the panel said.
It also said that the next one to two weeks would be decisive in preventing the spread of the virus.
· Japanese shares extended losses on Wednesday to their lowest close in more than four months, as a spike in coronavirus infections beyond mainland China threatened to damage global economic growth, forcing investors to dump risk assets.
The benchmark Nikkei average lost 0.79% to 22,426.19, its lowest close since Oct. 15, 2019 though the index pared most of its early losses to end above a major support level of 200-day moving average at 22,196.
· China stocks ended lower on Wednesday as fears over the global coronavirus contagion rose, though losses were contained as new infections fell in China and investors expected a further stimulus from Beijing to support the domestic economy.
Both the Shanghai Composite index and the blue-chip CSI300 index dropped more than 1% in early morning trade following Wall Street’s sharp losses on growing global virus fears. The indexes regained some lost ground as real estate and industrial stocks lent support.
· European markets continued their negative trend Wednesday with the coronavirus outbreak continuing to weigh on global investor sentiment.
The pan-European Stoxx 600 fell by another 0.8% early in the session, with travel and leisure stocks dropping 2% to lead losses as all sectors and major bourses traded in negative territory.
Reference: CNBC, Reuters
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