Asian equities sink, Europe bounces after virus-fuelled meltdown

HONG KONG (AFP) – Asian equities tumbled yesterday, extending a global rout that saw markets experience their worst day in decades as fears of a worldwide recession caused by the coronavirus pandemic wiped trillions off valuations.

Shell-shocked investors fled for the hills as governments across Europe and in the United States (US) struggled to get a grip on the crisis that has swept the planet and shut communities down.

Central bank moves to support financial markets have also failed to staunch the bloodletting, while US President Donald Trump’s decision to shut the US border to European travellers added to the panic.

“Markets remain in a freefall as uncertainty persists with no reliable anchor which can create near-term stability,” Ben Emons at Medley Global Advisors in New York said.

However, after a morning session wipeout across the region, most markets clawed back losses, even if they were still in negative territory as traders picked up bargain-basement stocks.

Tokyo, which fell as much as 10 per cent at one point, ended down 6.1 per cent, while Hong Kong was 1.1 per cent lower having plunged around seven percent earlier.

A man walks past a bank electronic board showing the Hong Kong share index. PHOTO: AP

Seoul, Bangkok, Manila and Singapore all managed to cut their losses by more than half, while Mumbai was up more than two per cent just hours after a trading halt kicked in because it had fallen more than nine per cent. Manila also rose having lost almost 10 per cent. Shanghai ended down 1.2 per cent.

But the standout was Sydney, which swung more than 12 per cent to end 4.4 per cent higher. “Despite continued uncertainty over the coronavirus spread, some market players with more optimistic outlooks will see current levels as good buying opportunities for medium and long term plays,” said Nick Twidale at IC Markets in Sydney.

Forager Funds’ Steve Johnson described the day’s trade as “completely and utterly nuts”.

In early trade, London rose more than six per cent, Frankfurt jumped four per cent and Paris more than three per cent.

US futures also pointed higher.

Even oil prices, which have been ravaged this week, surged almost four per cent after a quick intra-day turnaround.

Still, trading floors remain nervous places following a virtual implosion on Wall Street and in Europe.

The Dow lost 10 per cent in its worst session since 1987, while London also had its worst day since that year. Frankfurt had its blackest day since 1989, the year the Berlin Wall fell, while Paris suffered its biggest one-day loss on record.

Analysts said Trump’s ban on travel from Europe deeply rattled investors, and measures intended to shore up business and markets were proving insufficient.

The New York Federal Reserve announced measures to inject an additional USD1.5 trillion into financial markets this week and launch a bond-buying programme, while the European Central Bank (ECB) unveiled emergency efforts but did not include an interest rate cut.