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Asian markets rattled as China steps up virus response

by biasharadigest

http://www.capitalfm.co.ke/
More than 570 people have been infected with the coronavirus across China and it has since spread to several other Asian countries, as well as the United States/AFP

, HONG KONG, China, Jan 23 – Investor nerves over the spread of a deadly new virus from China rattled Asian equities and oil benchmarks on Thursday, as authorities moved to contain the disease.

The city at the centre of the outbreak was placed under effective quarantine, with flights and trains suspended from Wuhan and residents told not to leave “without a special reason”.

More than 570 people have been infected with the coronavirus across China and it has since spread to several other Asian countries, as well as the United States.

The coronavirus has caused alarm because of its similarity to SARS (Severe Acute Respiratory Syndrome), which killed hundreds of people in 2002-2003.

“China’s importance in the overall global supply chain and the fact they are a huge export market for many countries… opens up a more unfavourable global outcome this time around,” Stephen Innes, chief market strategist of AxiCorp, said in a note.

Oil prices were hit hard in overnight trade with both major indexes down by more than one percent.

“Given the importance of China for oil demand and having the outbreak falling on the cusp of peak domestic travel season, the timing is particularly damaging,” Innes said.

The Wuhan quarantine was announced just a day before the official start of the Lunar New Year holiday, when hundreds of millions of people travel across China.

Hong Kong and Shanghai both dropped 0.9 percent in morning trade while Tokyo was 0.6 percent lower.

Sydney and Seoul both fell 0.6 percent but Taipei was up 0.2 percent.

Innes said equity markets had so far been measured in their response to the disease, with sentiment buoyed by a strong public health response.

“With global health agencies working much more proactively and transparently to contain the Wuhan pneumonia than they did with the SARS outbreak, the market remains confident that the damaging knock-on effects will be far less harmful,” he wrote.

The World Health Organization has so far demurred from declaring a global health emergency — a rare instrument used only for the worst outbreaks.

China had taken “very, very strong measures” to contain the outbreak, WHO chief Tedros Adhanom Ghebreyesus said on Wednesday.

– Euro tariff threat –

European stocks were hit Wednesday by US President Donald Trump’s renewed threat to impose tariffs on imported cars and a gloomy auto sales forecast.

Trump once again warned of a possible 25 percent punitive tax on European cars if Brussels fails to agree to a trade deal.

Shares in carmakers fell with Daimler dropping more than two percent — the Mercedes parent company also warning of a likely 2019 earnings shortfall due to massive new charges related to its diesel emissions cheating scandal.

But Wall Street equities finished flat, with indexes barely stirred by either strong local earnings reports or the rising death toll in the coronavirus outbreak.

– Key figures around 0240 GMT –

Tokyo – Nikkei 225: DOWN 0.6 percent at 23,880.08

Hong Kong – Hang Seng: DOWN 0.9 percent at 28,080.94

Shanghai – Composite: DOWN 0.9 percent at 3,017.19

Euro/dollar: UP at $1.1090 from $1.1082

Pound/dollar: UP at $1.3133 from $1.3049

Euro/pound: DOWN at 84.41 pence from 84.92 pence

Dollar/yen: DOWN at 109.66 yen from 109.93 yen

Brent Crude: DOWN 71 cents at $62.50 per barrel

West Texas Intermediate: DOWN 81 cents at $55.93

New York – DOW: FLAT at 29,186.27 (close)

London – FTSE 100: FTSE 100: DOWN 0.5 percent at 7,571.93 (close)

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