Asian shares dip as virus fears grip markets again
ASIAN shares slipped yesterday as fears about the virus outbreak once again dominated financial markets.
Japan’s benchmark Nikkei dived 2.7 per cent to finish at 20,749.75. Australia’s S&P/ ASX 200 lost 2.8 per cent to 6,216.20. South Korea’s Kospi dropped 2.2 per cent to 2,040.22. Hong Kong’s Hang Seng declined 2.3 per cent to 26,145.32, while the Shanghai Composite skidded 1.2 per cent to 3,034.51. Shares also dropped in Taiwan and Southeast Asia.
Markets have endured roller coaster ups and downs for weeks amid uncertainty over how much damage the outbreak of the new coronavirus will do to the global economy.
Vishnu Varathan at Mizuho Bank in Singapore said the potential damage from the new virus was two-fold, with the initial impact coming from a direct impact on the economy.
“One succumbs to the sheer fear of community spread, prospects of deep economic impact from a sharp drop off in demand for travel and seizures in supply chains,” Varathan said. “The other is a strain that thrives on hopes of stimulus; be it frantic central bank rate cuts, the lull of liquidity infusions or more targeted fiscal offsets to provide pain relief,” he said.
On Wall Street yesterday, major indexes lost roughly 3.5 per cent, nearly wiping out the rally from a day before that was fuelled by hopes authorities around the world will move to cushion the economic fallout.
These vicious swings are likely to continue, as long as the number of new infections continues to accelerate, many analysts and professional investors say. Yesterday was the fourth consecutive day where the S&P 500 moved at least 2 per cent, the longest such stretch since the summer of 2011. The growing understanding that the spread of infections – and resulting damage to the economy – may not slow anytime soon is pulling sharply on markets. That pull has taken turns this week with the increasingly worldwide push that governments and central banks are trying to give markets through spending plans and interest-rate cuts.