GLOBAL MARKETS-Asian stocks arrest slide but investors on edge over China virus

Published 22/01/2020, 01:57
Updated 22/01/2020, 02:01
© Reuters.  GLOBAL MARKETS-Asian stocks arrest slide but investors on edge over China virus

* Markets on edge amid fears of China virus spreading

* Asian stocks, currencies mostly steady after risk-off

shift

* WHO meets Wednesday to consider severity of virus outbreak

* Oil recovers from Libyan supply jitters

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook

SINGAPORE, Jan 22 (Reuters) - Asian share markets steadied

on Wednesday as investors took stock of the spread of a new

strain of coronavirus from China and weighed the possible

consequences of a global pandemic.

Fears of contagion, particularly as millions travel for

Lunar New Year festivities, knocked stocks from record levels on

Tuesday as investors swapped them for safer assets. The outbreak has revived memories of the Severe Acute

Respiratory Syndrome (SARS) epidemic in 2002-03, a coronavirus

outbreak that killed nearly 800 people and hurt world travel.

MSCI's broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS spent the morning trading either side of flat.

Japan's Nikkei .N225 opened 0.1% lower, before steadying

to trade flat, as did Korea's Kospi index .KS11 . Australia's

S&P/ASX 200 .AXJO inched 0.3% higher, while the safe havens of

gold and U.S. 10-year government bonds handed back some gains.

"After weeks of gains ... the virus has loomed large because

of the market's positioning," said Michael McCarthy, Chief

Market Strategiest at brokerage CMC Markets in Sydney.

"The economic impact at this stage is zero. The pullback

we've seen over the last 24 hours is the reflection of a

potential threat."

The outbreak, from its origin in Wuhan, China, has reached

the United States, Thailand, South Korea, Japan and Taiwan.

Authorities have confirmed more than 300 cases of the virus

in China, mostly in Wuhan, where six people have died.

The World Health Organization (WHO) meets later on Wednesday

to consider whether the outbreak is an international emergency.

On Wall Street overnight, the Dow Jones Industrial Average

.DJI fell half a percent and the S&P 500 .SPX dropped almost

a third of a percentage point, following larger losses in Asia.

SARS FLASHBACK

In Hong Kong, where the SARS outbreak buffeted the economy,

the main stock index .HSI fell 2.8% on Tuesday, its biggest

one-day decline in over five months. Airline, travel, hotel and

casino stocks were the hardest hit, along with China's yuan

CNY= , which had its worst day since August.

"(This) virus is believed to be less serious than the SARS

outbreak ... but it does belong to the same class of pathogens,"

Jefferies analysts wrote in a note. "The major point is whether

the virus turns from an outbreak to an epidemic."

The theme was the same in other markets. U.S. 10-year

government bond yields, which fell to a two-week low on Tuesday,

rebounded slightly to 1.7848% US10YT=RR . US/

Spot gold XAU= was 0.1% weaker at $1,556.00 per ounce.

In currencies, the safe-haven yen JPY= eased slightly from

the one-week high it touched overnight, although the yuan nursed

its losses. In offshore trade, the Chinese currency barely

budged from the bottom of its Tuesday plunge, last changing

hands at 6.9070 per dollar CNH= .

Oil prices also settled back as traders figured a

well-supplied global market would be able to absorb disruptions

that have cut Libya's crude production to a trickle. O/R

Brent LCOc1 futures settled down 20 cents at $64.59 a

barrel. U.S. crude CLc1 fell 20 cents, or 0.3%, to $58.38 per

barrel.

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