Asia stocks decline amid warnings China virus still a threat

BEIJING (AP) — Global stock markets slid yesterday after China reported an uptick in new virus cases and analysts warned optimism the disease is under control might be premature.

London and Frankfurt opened lower and Tokyo, Hong Kong and Seoul declined. Shanghai closed up after spending most of the day in negative territory.

A decline last week in daily Chinese reports of new virus cases fed investor optimism the disease and its economic impact might fade. But economists and industry analysts warn the outbreak still is weighing on retailing, tourism, electronics, shipping and other fields.

Markets took the decline “as an early indication of containment,” Vishnu Varathan of Mizuho Bank said in a report.

“But this may well prove to be premature relief,” said Varathan. “And so, the ‘Coro-NO-virus’ relief is at best shallow, if not essentially no relief, at this point.”

A pedestrian walks past an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo yesterday. PHOTO: AP

In early trading, London’s FTSE 100 fell 0.3 per cent to 7,446.73 and Germany’s DAX shed 0.1 per cent to 13,493.32. France’s CAC 40 retreated 0.3 per cent to 6,008.46.

On Wall Street, the future for the S&P 500 index was down under 0.1 per cent while that for the Dow Jones Industrial Average was up less than 0.1 per cent.

In Asia, Tokyo’s Nikkei 225 closed down 0.6 per cent at 23,685.98 and Hong Kong’s Hang Seng lost 0.6 per cent to 27,225.13.

The Shanghai Composite Index bucked the trend and gained 0.5 per cent to 2,890.49, suggesting government-backed entities bought shares to shore up public confidence.

In Seoul, the Kospi sank 0.5 per cent to 2,201.07 and Sydney’s S&P-ASX 200 was 0.1 per cent lower at 7,012.50.

India’s Sensex shed 0.6 per cent to 40,910.93. Markets in New Zealand, Taiwan and Southeast Asia also retreated.

China reported 3,062 new virus cases in the 24 hours through midnight on Sunday. That was up 15 per cent from last Saturday’s tally in a reminder of enduring uncertainty about the disease, which has prompted authorities to cut most access to the central city of Wuhan and impose travel and other restrictions on others.

China’s central bank promised additional lending to companies involved in fighting the virus. The government promised tax cuts and subsidies to farmers, makers of medical supplies and other companies.

Authorities are using targetted loans and government spending instead of a broad-based stimulus, Iris Pang of ING said in a report.

“It seems that policymakers do not want to confuse emergency policies with standard easing policies,” said Pang. “We may not see broad-based economic policy actions in the near term.” Since mid-January, central banks in Malaysia, the Philippines and Thailand have cut interest rates to cushion against the impact of anti-disease measures.

On Wall Street, stocks snapped a four-day winning streak and fell last Friday but closed out the United State’s (US) market’s best week in eight months.

Stronger corporate earnings and hopes that global central banks can support markets had helped to diffuse fears about the Chinese virus. But analysts said investors took profits last Friday amid lingering uncertainty about the virus’s global impact.

The benchmark S&P 500 index retreated 0.5 per cent and the Dow lost 0.9 per cent. The Nasdaq composite slid 0.5 per cent.

ENERGY

Benchmark US crude lost 23 cents to USD50.07 per barrel in electronic trading on the New York mercantile Exchange. The contract fell 63 cents last Friday to settle at USD50.32. Brent crude, used to price international oils, gave up 17 cents to USD54.28 per barrel in London. It slid 46 cents the previous session to close at USD54.47 per barrel.

CURRENCY

The dollar rose to JPY109.78 from last Friday’s JPY109.72. The euro gained to USD1.0951 from USD1.0948.