Asian shares rise, Europe falls after China moves on virus

TOKYO (AP) – European indexes slipped in early trading yesterday after Asian shares rose on optimism that China’s latest actions may help curtail some of the expected economic damage from the virus outbreak.

France’s CAC 40 slipped 0.3 per cent to 5,916.83 in early trading, while Germany’s DAX lost 0.3 per cent to 13,247.33. Britain’s FTSE 100 slipped 0.3 per cent to 7,421.30. United States (US) shares were set to drift lower with Dow futures down 0.2 per cent at 28,722. S&P 500 futures were also down 0.2 per cent at 3,291.90.

Japan’s benchmark Nikkei 225 gained 1.0 per cent to finish at 23,319.56. Australia’s S&P/ASX 200 added 0.4 per cent to 6,976.10. South Korea’s Kospi was up 0.4 per cent at 2,165.63. Hong Kong’s Hang Seng edged up 0.3 per cent to 26,754.04, while the Shanghai Composite gained 1.3 per cent to 2,818.09.

“Risk sentiment remains on the mend, setting Asia markets up for intraday gains. Although this remains the ebb and flow around an issue such as the coronavirus with the impact still under assessment,” said Market Strategist at IG in Singapore Jingyi Pang. The gains reflected a broad rally on Wall Street overnight that drove the Dow Jones Industrial Average more than 400 points higher and gave the S&P 500 its best day in more than five months.

The gains also pushed the tech-heavy Nasdaq to an all-time high and added to a solid start to February for the broader market after a downbeat January.

A currency trader at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. PHOTO: AP

Investors welcomed a decision by China’s central bank to inject USD57 billion into its markets. The move is the latest step by Beijing to soften the financial blow of the recent virus outbreak. Worries about the potential global economic impact of a protracted outbreak rattled markets in recent weeks, erasing the S&P 500’s gains last month.

Apple and Microsoft were among the tech-sector standouts. Like other major technology companies, they rely heavily on doing business with China. Health care, industrial, financial stocks also notched solid gains.

China’s latest measure to shore up its markets follows an announcement from Monday that the government would put USD173 billion into its markets as they reopened from an extended break.

The world’s second-largest economy is in lockdown that is threatening economic growth there and globally. More companies, including Sony, are warning investors of a potential hit to revenue and profit because of the virus. More than 20,000 cases have been confirmed globally, along with over 400 deaths. The cases have been mostly in China.

Rising expectations of further rate cuts by the US Federal Reserve may have also helped lift stocks. Investors now foresee an overwhelming likelihood of at least one Fed rate cut this year, with nearly half expecting two cuts, according to data from CME Group.

The Fed has recently indicated that it’s comfortable with rates at their current level. But traders seem to expect that economic anxiety and damage resulting from China’s viral outbreak will lead the Fed to further ease borrowing rates.

ENERGY: Benchmark crude oil rose 14 cents to USD49.75 a barrel. It fell 50 cents to settle at USD49.61 a barrel on Tuesday. Brent crude oil, the international standard, gained 20 cents to USD54.16 a barrel.

CURRENCIES: The dollar rose to JPY109.35 from JPY109.07 on Tuesday. The euro weakened to USD1.1038 from USD1.1053.