Asian stocks fall as virus fears spook markets, hit tourism

BANGKOK (AP) — Shares tumbled yesterday in the few Asian markets open as China announced sharp increases in the number of people affected in an outbreak of a potentially deadly virus.

Many regional markets, including China’s, were closed in Asia for Lunar New Year holidays. Australia was closed for Australia Day. Tokyo’s Nikkei 225 index sank two per cent to 23,343.51. India’s Sensex lost 0.4 per cent to 41,451.37, while the benchmark in Thailand dropped 2.9 per cent. Indonesia’s share benchmark was 1.4 per cent lower.

China announced it was extending its week-long public holiday by an extra three days as a precaution against having the virus spread still further.

By midnight last Sunday, the National Health Commission said 80 people had died out of 2,744 cases that were confirmed.

Various governments have announced plans to evacuate people from Wuhan, the central Chinese city at the centre of the pandemic. China halted outbound tours and Wuhan and some other cities stopped public transport, obliging tens of millions of people to stay where they are at the time of the country’s peak travel season.

The virus can cause pneumonia and other severe respiratory symptoms. The World Health Organization has so far held off on declaring the situation a global emergency, which would bring more money and resources to fight it, but could trigger economically damaging restrictions on trade and travel.

People walk by a securities firm in Tokyo. PHOTO: AP

“Traders who would be typically discussing the weekend football results are now sadly focussing on mortality scores this morning,” Stephen Innes of AxiCorp said in a commentary.

Apart from the direct impact on tourism and travel, “any economic shock to China’s colossal industrial and consumption engines will spread rapidly to other countries through the increased trade and financial linkages associated with globalisation,” he said.

In other developments in Asia, the Indian government said it plans to sell its entire stake in the national carrier Air India to shore up falling revenues and privatise the airline.

A government document issued yesterday invited initial expressions of interest in the airline, after an initial attempt to sell the carrier last year failed to attract a single bidder. Air India operates both domestic and international routes, has a debt burden of more than INR580 billion (USD8 billion) and has been operating at a loss for years.

On Friday, the S&P 500 had its worst day since early October, dropping 0.9 per cent as health care stocks saw steep losses. The sell-off followed news that a Chicago woman had become the second United States (US) patient diagnosed with the new virus from China.

The Dow Jones Industrial Average dropped 0.6 per cent and the Nasdaq composite lost 0.9 per cent. The yield on the 10-year Treasury fell to 1.64 per cent from 1.74 per cent last Thursday.

Drugmaker Bristol-Myers Squibb led the slide in health care stocks, shedding 4.2 per cent. Health insurers also fell. United Health Group dropped 2.2 per cent and Amgen lost 3.4 per cent.

Banks and other financial sector companies also took heavy losses, with credit card issuers among the biggest decliners. Discover Financial Services tumbled 10.1 per cent and Synchrony Financial slumped 9.8 per cent.

Airlines and several other companies in the travel and tourism industries fared poorly amid worries about the potential economic impact of the virus. United Airlines fell five per cent and American Airlines dropped 5.6 per cent. Cruise line operator Carnival fell 4.4 per cent.

Investors have been shifting money into safe-play, high-dividend stocks and US government bonds. The surge in bond-buying has sent yields lower. The yield on the 10-year Treasury note fell to 1.67 per cent from 1.74 per cent late Thursday, a big move.

Investors also are digging through the latest batch of company earnings reports, including strong results from chipmaker Intel and American Express. Next week is shaping up as the busiest week for earnings reports, with roughly 40 per cent of the companies in the S&P 500 due to issue their results for the last three months of 2019.

Benchmark US crude gave up USD1.13 to USD53.06 per barrel in electronic trading on the New York Mercantile Exchange. It lost USD1.40 to USD54.19 per barrel last Friday.

Brent crude, the international standard, declined USD1.23 to USD58.66 per barrel. It shed USD1.39 to USD59.89 per barrel last Friday.

In currency trading, the dollar weakened to JPY109.08 from JPY109.28. The euro strengthened to USD1.1033 from USD1.1025.