A sell-off that wiped out global stock gains for the year is set to continue in Asia Tuesday amid concerns authorities around the world are struggling to keep the coronavirus from spreading. Havens including Treasuries, the yen and gold surged.
Futures signal heavy losses when markets reopen in Japan after a holiday, with contracts in Hong Kong also pointing lower. Australian stocks started trading weaker. U.S. futures were little changed at the open after U.S. stock benchmarks slumped more than 3%, with the S&P 500 Index dropping the most since February 2018. European stocks also tumbled. Asia set the tone for the sell-off Monday, but the risk-off mood doesn’t look set to ease as the epidemic spread to more than 30 countries, with Afghanistan, Bahrain and Kuwait reporting their first cases. The yield on 10-year Treasuries approached the 2016 record low. The yen held gains after jumping almost 1% and oil was steady after it slumped.
This week’s market moves come after a series of warnings from companies over the potential impact of the virus on business and global supply chains. Governments and businesses are curbing travel and trade in an attempt to contain the novel pathogen that can be transmitted by people without symptoms.
While the head of the World Health Organization called new cases “deeply concerning,” he said the outbreak isn’t yet a global pandemic.
“Markets hate uncertainty and the coronavirus represents the most uncertain macro risk markets have faced in years,” said Alec Young, managing director of global markets research at FEST Russell. “Investors are also acutely aware that many misjudged the economic severity of the virus early on, making them more open to entertaining worst-case scenarios now.”
Elsewhere, Italian bonds dropped on concern that the spread of the coronavirus may push the economy into a recession. Italy reported at least six deaths, and Milan, the country’s financial hub, is in virtual lockdown.
These are some key events coming up:
- Earnings keep rolling in from companies including: Home Depot Inc. on Tuesday; Peugeot SA on Wednesday; Baidu Inc., Best Buy Co. Inc., Occidental Petroleum Corp. and Dell Technologies Inc. on Thursday; and London Stock Exchange Group Plc on Friday.
- The Democratic presidential debate in South Carolina is on Tuesday.
- The Bank of Korea announces its policy decision on Thursday, with risks to the outlook growing amid a surge in coronavirus cases.
- U.S. jobless claims, GDP and durable goods data are out Thursday.
- Japan industrial production, jobs, and retail sales figures are due on Friday.
These are the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 8:05 a.m. in Tokyo. The S&P 500 Index sank 3.4% to the lowest in more than three weeks.
- Nikkei 225 futures fell over 4%.
- Australia’s S&P/ASX 200 Index fell 1.4%.
- Hong Kong’s Hang Seng Index futures fell 0.8% earlier.
- The MSCI All-Country World Index sank 3%.
- The Stoxx Europe 600 Index sank 3.8%, the largest tumble in almost four years.
Currencies
- The yen traded at 110.73 per dollar after strengthening 0.8%, the biggest increase in six months.
- The offshore yuan was steady at 7.0362 per dollar.
- The Bloomberg Dollar Spot Index climbed 0.1%.
- The euro was little changed at $1.0853.
Bonds
- The yield on 10-year Treasuries decreased 11 basis points to 1.36%, the lowest in more than three years.
- Australia’s 10-year bond yield fell two basis points to 0.9%.
Commodities
- West Texas Intermediate crude traded at $51.50 a barrel after sliding 3.7%.
- Gold was at $1,657.39 an ounce, near the highest in about seven years.
— With assistance by Vildana Hajric, and Claire Ballentine
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