Asian shares fell on Wednesday as a US warning to Americans to prepare for the possibility of a coronavirus pandemic jolted Wall Street yet again and pushed yields on safe-haven Treasuries to record lows. The S&P 500 and the Dow Jones Industrial Average both shed more than 3 per cent on Tuesday in their fourth straight session of losses.
That led MSCI’s broadest index of Asia-Pacific shares outside Japan down 1.1 per cent. Japan was among the worst-performing market in the region, weighed by growing concerns the virus could force the cancellation of the Tokyo Olympics. Euro Stoxx 50 futures were down 0.36 per cent, German DAX futures fell 0.53 per cent, while FTSE futures were off 0.4 per cent. Yields on 10-year and 30-year US Treasuries teetered near record lows and gold rose as worries about the economic impact of the virus outbreak boosted safe-haven assets.
The World Health Organisation says the epidemic has peaked in China, but concern that its spread is accelerating in other countries is likely to keep investors on edge. “What we are seeing is share markets are playing catch up,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “Other asset markets have been flashing warning signs for weeks. A corrective bounce in equities is possible, but we still have a lot of downward momentum.”
Chinese shares fell 0.21 per cent. Shares in South Korea, which has been rattled by a sudden rise in virus infections, briefly hit a two-month low. While the stock rout has been global, the recent pace of selling in Asia has not been as severe as it has on Wall Street, which has been hit hard by the escalation of virus cases outside of Asia. MSCI World, a market cap weighted stock market index of 1,644 stocks from companies throughout the world, has seen its total value fall by $3 trillion to $42.98 trillion over the past four trading sessions, Reuters calculations show. US stock futures rose 0.57 per cent in Asia on Wednesday, but that did little to brighten the mood.
Adding to recent fears was an alert from the US Centers for Disease Control and Prevention on Tuesday warning Americans to prepare for the spread of coronavirus in the United States, signalling a change in tone for the Atlanta-based US health agency. The virus has claimed almost 3,000 lives in mainland China but has spread to dozens of other countries. Of increasing concern to investors, however, in the rising death toll in other countries. Drastic travel restrictions slammed the brakes on China’s manufacturing and consumer spending, and there are worries other countries will face similar disruptions. The virus has also hit Japan’s stocks hard on rising worries it could lead to cancellation of the 2020 Summer Olympics scheduled to start in Tokyo in July.
Japan’s Nikkei stock index slid 0.92 per cent, while shares of Japan’s Dentsu Group Inc, an advertising agency deeply involved in the planning and operation of the games, fell to a seven-year low on Wednesday.
Shares of sportswear makers and other companies related to the Olympics have also fallen recently. The yield on benchmark 10-year Treasury notes traded at 1.3621 per cent on Wednesday in Asia, close to a record low of 1.3070 per cent The 30-year yield stood at 1.8420 per cent, above a record low of 1.7860 per cent. The dollar traded at $1.0876 per euro, off an almost three-year high of $1.0778 reached on February 20th. Spot gold rose 0.57 per cent to $1,644.38 per ounce as investors sought safe havens. – Reuters