SYDNEY (BLOOMBERG, AFP) – A selloff that wiped out global stock gains for the year continued in Asia on Tuesday (Feb 25) amid concerns authorities around the world are struggling to keep the coronavirus from spreading.
Tokyo stocks dropped more than 3.5 per cent at the open after a public holiday, tracking falls on global markets as fears mounted that the new coronavirus outbreak will derail economic growth.
The Nikkei 225 index sank 3.58 per cent while the broader Topix index was down 3.53 per cent
Australia’s S&P/ASX 200 Index fell 2.1 per cent while South Korea’s Kospi index was down0.2 per cent. Futures in Hong Kong pointed to a weaker start.
US futures edged higher after US stock benchmarks slumped more than 3 per cent, with the S&P 500 Index dropping the most since February 2018. European stocks also tumbled.
Asia set the tone for the sell-off Monday, but the risk-off mood doesn’t look set to ease as the epidemic spread to more than 30 countries, with Afghanistan, Bahrain and Kuwait reporting their first cases. The yield on 10-year Treasuries approached the 2016 record low. The yen held gains after jumping almost 1 per cent and oil was steady after it slumped.
This week’s market moves come after a series of warnings from companies over the potential impact of the virus on business and global supply chains. Governments and businesses are curbing travel and trade in an attempt to contain the novel pathogen that can be transmitted by people without symptoms.
While the head of the World Health Organization called new cases “deeply concerning,” he said the outbreak isn’t yet a global pandemic.
“Markets hate uncertainty and the coronavirus represents the most uncertain macro risk markets have faced in years,” said Alec Young, managing director of global markets research at FEST Russell. “Investors are also acutely aware that many misjudged the economic severity of the virus early on, making them more open to entertaining worst-case scenarios now.”
Elsewhere, Italian bonds dropped on concern that the spread of the coronavirus may push the economy into a recession. Italy reported at least six deaths, and Milan, the country’s financial hub, is in virtual lockdown.
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