(Bloomberg) -- Asian stocks slumped to a seven-week low and sovereign bonds rallied amid mounting evidence that the coronavirus epidemic is disrupting the world’s second-largest economy.
A slew of companies have suspended some of their China operations for the time being in the effort to contain the disease, and economists have started cutting growth forecasts. Japanese shares slid more than 1%, and Korea, Hong Kong and Australia saw losses. Taiwan tumbled over 4% as that market came back from a holiday. U.S. futures dropped and Treasury yields added to declines. The yuan dipped offshore.
Foxconn’s Hon Hai Precision Industry Co. -- which makes most of the world’s iPhones, and has major facilities in China -- plunged as much as 10%. Japanese 10-year bond yields hit their lowest level since December and Australian ones slid below 1%.
With the death toll from the coronavirus rising to 170 and the number of cases continuing to rise, investors remain cautious. Federal Reserve Chairman Jerome Powell said the outbreak of the coronavirus will likely hit the Chinese economy and could spill wider, but it was too early to assess its impact on the U.S.
“At this point the real impact of the coronavirus depends on how fast the containment of the virus is,” Eugenia Victorino, head of Asia strategy at SEB, told Bloomberg TV in Singapore. “There is really a lot of uncertainty and we do not know when the peak of the infections will be.”
Powell also said he wasn’t satisfied with inflation running persistently below 2%, after he and his colleagues kept Fed policy on hold Wednesday.
Meantime, investors continue to assess the earnings outlook -- positive results from Microsoft Corp (NASDAQ:MSFT). and Tesla (NASDAQ:TSLA) Inc. overshadowed an underwhelming report from Facebook Inc (NASDAQ:FB).
Here are some events to watch out for this week:
- International Paper, Unilever (LON:ULVR) and Shell (LON:RDSa) report on Thursday, followed by South Korean chipmaker SK Hynix, Chevron (NYSE:CVX), Caterpillar (NYSE:CAT) and Exxon Mobil (NYSE:XOM) all on Friday.
- The Bank of England meeting on Thursday is highly anticipated after a series of dovish comments raised speculation policy makers could lower interest rates.
- The U.S. reports fourth-quarter GDP Thursday.
- The U.K. is scheduled to leave the European Union Friday.
Stocks
- Japan’s Topix index slid 1.4% as of 11:28 a.m. in Tokyo.
- Futures on the S&P 500 dropped 0.4%.
- Hang Seng lost 1.3%.
- Australia’s S&P/ASX 200 Index declined 0.4%.
- South Korea’s Kospi index slid 0.8%.
- The yen was at 108.90 per dollar, up 0.1%.
- The offshore yuan retreated 0.2% to 6.9814 per dollar.
- The euro was little changed at $1.1012.
- The yield on 10-year Treasuries dipped to 1.57%.
- Australia’s 10-year yield fell six basis points to 0.955%.
- West Texas Intermediate crude fell 0.4% to $53.04 a barrel.
- Gold ticked up 0.2% to $1,580.46 an ounce.