AP – Shares were mostly lower in Asia yesterday after the World Health Organization (WHO) declared the outbreak of a new virus that has spread from China to more than a dozen countries a global emergency.
Markets in mainland China remained closed as the United States (US) warned against all travel to China following the WHO’s announcement.
Japan’s Nikkei 225 index rose one per cent to 23,205.18, while the S&P ASX/200 edged 0.1 per cent higher to 7,017.20. Hong Kong’s Hang Seng fell 0.2 per cent, to 26,392.85 and the Sensex in India gave up 0.2 per cent to 40,817.61. Taiwan’s benchmark picked up 0.6 per cent, while South Korea’s Kospi skidded 1.4 per cent to 2,119.01. Shares also fell in Jakarta and Kuala Lumpur.
A monthly survey of manufacturers in China showed factory activity weakened, but it did not reflect the latest developments from the virus outbreak.
A late wave of buying left major US stock indexes with modest gains on Wall Street after they spent most of the day in the red. Technology companies and banks fared best.
China reported 9,692 confirmed cases of the virus yesterday with a death toll of 213, including 43 new fatalities.
Investors worry that the outbreak could end up dampening global economic growth. But those concerns appeared to ease by late afternoon, after the director general of the WHO said that the organisation was not recommending limiting travel or trade to China.
The impact of the WHO’s decision to designate the new coronavirus a global public health emergency was offset by its recommendation not to restrict travel. But the US countered that with its own advisory warning against all travel to China, and advice to Americans inside China to leave if possible.
Added to that was “the barrage of airlines cancelling flights and the resulting slowdown in economic activity that would bring which had really spooked markets,” said Jasper Lawler of LCG.
The S&P 500 index rose 0.3 per cent to 3,283.66 after falling as much as 0.9 per cent earlier in the day. The Dow Jones Industrial Average climbed 0.4 per cent to 28,859.44, while the Nasdaq added 0.3 per cent to 9,298.93. Smaller company stocks recovered most of the way after taking the brunt of the selling. The Russell 2000 index slipped 0.1 per cent to 1,648.22.
Stocks have given up some ground after a strong start to the year amid uncertainty over the virus outbreak. Still, the major indexes remain on track to end January with gains.
The WHO’s move to declare the outbreak a global emergency on Thursday came after the number of cases spiked tenfold in a week. The declaration means the WHO sees the virus as a risk to other countries that requires an international response.
“While the WHO declaration was anticipated to come at some point, they did stop short of suggesting travel and trade restrictions with China were necessary to prevent the spread of the virus,” said Chief Investment Officer of BMO Wealth Management Mike Stritch. “The aversion of a ‘worst case scenario’ put a floor under equities with airlines, for example, moving higher in the afternoon.”