AP – Shares advanced in most Asian markets yesterday after a rebound on Wall Street that reversed most losses from a sell-off the day before.
Hong Kong’s Hang Seng dropped 2.8 per cent, to 27,174.43 after reopening from Lunar New Year holidays, while other Chinese markets remained closed.
The United States (US) rally overnight snapped a two-day skid driven by fears that the spread of a new virus in China could snag global economic growth. China reported yesterday that the virus has sickened more than 6,000 people in China and over a dozen other countries and killed 132 people.
Tokyo’s Nikkei 225 index gained 0.7 per cent to 23,379.40 and in South Korea the Kospi picked up 0.5 per cent to 2,188.04. Australia’s S&P ASX/200 rose 0.5 per cent to 7,031.50, while the Sensex in India climbed 0.8 per cent to 41,283.40. Shares also rose in Southeast Asia, apart from Kuala Lumpur, which fell 1.4 per cent as trading resumed after the Lunar New Year.
Investors placed their concerns about the virus’ potential economic impact on the back burner on Tuesday and snapped up US stocks beaten down earlier in the week, particularly chipmakers and other technology companies. The sector notched the biggest gain on Tuesday and powered much of the rally.
The S&P 500 index rose one per cent to 3,276.24. The Dow gained 0.7 per cent to 28,722.85. The Nasdaq climbed 1.4 per cent to 9,269.68, while the Russell 2000 index of smaller company stocks picked up 0.9 per cent, to 1,658.31.
But the potential for still more virus-related scares remains, analysts cautioned.
“Markets may enjoy one or two days in the sun. I would be remiss in my role as the voice of reason if I did not caution investors to be wary of chasing, what may be temporary, dead cat bounces,” Jeffrey Halley of Oanda said in a commentary, “Until we have much more clarity on the controlling of the Wuhan virus outbreak at the very least.”
Bond prices fell, sending yields higher following a significant drop a day earlier. The yield on the 10-year Treasury climbed to 1.65 per cent from 1.60 per cent late Tuesday.
Despite the rebound, the major US indexes are still down for the week. The losses have hit smaller company stocks hardest, erasing the Russell 2000’s gains for the year.
US stocks were running at all-time highs at the start of the month. An index measuring volatility in the market was running at 12-month lows and the benchmark S&P 500 had climbed around 13 per cent since early October after Washington and Beijing announced they would sign a preliminary trade deal.
That set the market up for a pullback, and investors’ jitters over the virus outbreak centred on the central Chinese city of Wuhan fit the bill.
“It may be symptomatic about how bullish overall people have been and how much money still sits on the sidelines,” Frederick said. “People are just looking for any opportunity to get a bargain right now, but it could ultimately end up being a little bit risky to do that.”
Hong Kong has joined much of China in seriously restricting travel by cutting all rail links to the mainland tomorrow. China’s containment efforts began with the suspension of plane, train and bus links to Wuhan and has now expanded to 17 cities with more than 50 million people in the most far-reaching disease-control measures ever imposed.
The US and several other nations were taking steps to airlift citizens out of a Chinese city at the centre of the outbreak. Still, US health officials said on Tuesday that, for now, the risks to Americans is very low.
Benchmark crude oil rose 59 cents to USD54.07 per barrel in electronic trading on the New York Mercantile Exchange. It gained 34 cents to settle at USD53.48 a barrel on Tuesday. Brent crude oil, the international standard, gained 65 cents to USD59.46 per barrel. Overnight it picked up 23 cents to close at USD58.81 a barrel.
Gold fell USD4.30 to USD1,565.50 per ounce, silver was unchanged at USD17.46 per ounce and copper fell two cents to USD2.58 per pound.
The dollar slipped to JPY109.09 from JPY109.12 on Monday. The euro fell to USD1.1018 from USD1.1025.