Nikkei 225 Tumbles 3% as Fear Grips Asia Markets: Markets Wrap

Asian stocks began another brutal session on Friday as fears about the coronavirus gripped global markets following the biggest tumble for U.S. equities since 2011. The rally in sovereign bonds eased after yields hit record lows.

Losses for Japan’s Nikkei 225 topped 3% in early trading, and Australian stocks saw similar declines. The S&P 500 slumped over 4% Thursday after California said it was monitoring 8,400 people for signs of the virus after they had traveled to Asia. U.S. futures ticked higher, though remained volatile. Global shares are down about 10% from this month’s peak and are heading for the worst week since the 2008 crisis. Yields on 10-year U.S. and Australian government bonds edged up.

“Even though the market is pricing in the fear of economic issues and disease hitting the U.S., we haven’t actually seen the emergence of clusters” of virus affected people in the U.S., Steve Englander, global head of foreign exchange research at Standard Chartered told Bloomberg TV. “Once that happens we will see another sell-off.”

Downgrades to expectations for global growth keep rolling in and money markets now see three Federal Reserve interest-rate cuts this year. Bank of America predicted that the global economy will see its weakest year since the financial crisis as the virus damages demand in China and beyond. Still, a resumption in operations at coffee shops and hotels from the likes of Starbucks Corp. and Marriott International Inc. shows that China’s economy is starting to come back online.

Meantime, U.S. health authorities moved to greatly expand the number of people who will be tested for the coronavirus. For a second day, more cases were reported outside than inside China.

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These are the main moves in markets:

Stocks

  • The S&P 500 Index lost 4.4% on Thursday. Futures added 0.1% as of 9:31 a.m. in Tokyo.
  • Japan’s Topix index lost 3% and the Nikkei 225 declined 3.2%.
  • South Korea’s Kospi index fell 2.3%.
  • Australia’s S&P/ASX 200 Index declined 3.2%.

Currencies

  • The yen was at 109.60 per dollar.
  • The offshore yuan traded at 7.0070 per dollar.
  • The euro was at $1.1002.

Bonds

  • The yield on 10-year Treasuries added two basis points to 1.28%.
  • Australia’s 10-year yield remained at about 0.86%.

Commodities

  • West Texas Intermediate crude declined 0.8% to $46.73 a barrel.
  • Gold held at $1,645.59 an ounce.

— With assistance by Jonathan Ferro

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