Asian shares rise despite worries about virus outbreak

TOKYO (AP) – Asian shares were higher yesterday, although the outbreak of a new virus in the region continued to weigh on investor sentiments.

Japan’s Nikkei 225 rose 0.5 per cent in morning trading to 23,813.14. Australia’s S&P/ASX 200 gained 0.6 per cent to 7,094.00. Hong Kong’s Hang Seng added 0.7 per cent to 27,771.29, while the Shanghai Composite inched up 0.1 per cent to 2,905.58.

“Despite coronavirus concerns, investors tend to believe that central banks and policymakers have measures to stimulate the economy during and post the public health crisis,” said CMC Markets in a report.

China reported 97 more deaths from the new disease, named COVID-19, pushing the total dead past 1,100, even as the country remained largely closed down to prevent its spread. The number of cases worldwide is about 45,000, all but a few hundred in China.

Investor sentiments in Asia were also cheered somewhat by Wall Street, where modest gains overnight nudged the S&P 500 and Nasdaq to all-time highs for the second straight day. The Dow Jones Industrial Average finished essentially flat.

Investors weighed another batch of mostly solid company earnings reports. Sprint soared after a federal judge cleared a major obstacle to the company being acquired by T-Mobile. Cruise operators, hotels and other companies that focus on travel made solid gains, the latest sign that traders are feeling less worried about the economic impact from the
virus outbreak.

“Stocks are collectively saying, ‘Hey, maybe we can work past some of the noise with the virus; maybe the fallout won’t be as big as we thought,” said Willie Delwiche, investment strategist at Baird. “And the US economy, so far at least, looks like it’s weathering it pretty well.”

People walk past an electronic board showing the Hong Kong share index outside a local bank in Hong Kong. PHOTO: AP

The S&P 500 index rose 5.66 points, or 0.2 per cent, to 3,357.75. The Dow Jones Industrial Average slipped 0.48 points, or less than 0.1 per cent, to 29,276.34. It had been up 0.5 per cent.

The Nasdaq composite gained 10.55 points, or 0.1 per cent, to 9,638.94. The Russell 2000 index of smaller company stocks picked up 9.85 points, or 0.6 per cent,
to 1,677.51.

After a downbeat on January, US stocks have been mostly notching gains this month as traders brush off fears about the virus outbreak and its impact on businesses and the global economy. Beijing has promised to take measures to soften the blow to China’s economy and investors are hopeful that other governments will do the same if necessary.

Travel-related stocks, which have been hammered by traders in recent weeks, notched gains on Tuesday. Hilton Worldwide rose 1.4 per cent, Carnival climbed 2.8 per cent and American Airlines gained 3.6 per cent.

Wall Street got some encouragement on Tuesday from Federal Reserve Chairman Jerome Powell. In his semiannual monetary report to Congress, Powell said it was too early to assess the threat the virus poses to the US economy, but he noted that the economy “is in a very good place” with strong job creation and moderate growth.

Traders welcomed a federal judge’s decision to reject claims by a group of states arguing T-Mobile’s proposed USD26.5 billion buyout of rival Sprint would mean less competition and higher phone bills. Shares in Sprint surged 77.5 per cent, while T-Mobile jumped 11.8 per cent.

Meanwhile, the Federal Trade Commission (FTC) said on Tuesday it has ordered Facebook, Amazon, Apple, Microsoft and Google’s parent Alphabet to turn over detailed information on their acquisitions going back to 2010 as part of an investigation into the five giant tech companies’ market dominance.

The FTC, the Justice Department and a House committee have been investigating the conduct of big tech companies and whether they aggressively bought potential rivals to suppress competition. Some critics have pointed to Facebook’s acquisition of Instagram and WhatsApp, for example, as deals that should be questioned.

Microsoft slid 2.3 per cent, Facebook fell 2.8 per cent and Apple dropped 0.6 per cent.
Amazon rose 0.8 per cent, while Alphabet inched up 0.1 per cent.

Investors also assessed the latest batch of company earnings reports on Tuesday.

AutoNation climbed 6.3 per cent after the car dealership’s latest quarterly results topped Wall Street’s forecasts, aided by higher demand for used cars.

Cloud-based phone system provider RingCentral also posted surprisingly good earnings and issued a solid forecast. The stock rose 6.8 per cent.

Strong fourth-quarter results also gave shares in Brighthouse Financial a boost. Shares in the annuity and life insurance company, which announced a USD500 million share buyback programme, jumped 10.7 per cent.

Results from other companies failed to impress traders.

Goodyear Tire & Rubber slumped 12.4 per cent after the tyre maker’s fourth-quarter earnings and revenue fell short of Wall Street forecasts.

Under Armour plunged 18.9 per cent after the athletic gear company said it may need to restructure this year, which may involve scuttling the opening of its New York City flagship store. The company also gave investors a weak profit forecast for the year and said the virus outbreak in China will drag first-quarter sales down by USD50 million to USD60 million.

ENERGY: Benchmark crude oil added 60 cents to USD50.54 a barrel. It rose 37 cents to settle at USD49.94 a barrel. Brent crude oil, the international standard, gained 92 cents to close at USD54.93 a barrel.

CURRENCIES: The dollar rose slightly to JPY109.89 from JPY109.85 on Tuesday. The euro strengthened to USD1.0918 from USD1.0914.