Bank of America just raised its EUR/USD forecast
* Euro hits 7-week low after ECB; offshore yuan remains
fragile
* Too early to declare China virus a global health emergency
* China, other Asian markets closed for Lunar New Year
holiday
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tomo Uetake
TOKYO, Jan 24 (Reuters) - Asian shares held their ground on
Friday as trade slowed for the Lunar New Year, despite investors
fears that a new coronavirus in China could spread faster as
millions of people would be travelling over the week-long
holiday.
Markets had steadied overnight, as investors took some
solace from the World Health Organisation labelling the outbreak
an emergency for China, where 25 people have died and at least
800 have been infected, but not, as yet, for the rest of the
world. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.1%, while Japan's Nikkei .N225 eased a
marginal 0.05% and Australian stocks .AXJO added 0.3%.
Trade in Asia is already slowing down for the Lunar New Year
holiday, with financial markets in China, Taiwan and South Korea
closed on Friday.
"Investors are worried that the outbreak of coronavirus
will dampen consumption in China when the Chinese economy has
been already cooling down," said Yasuo Sakuma, chief investment
officer at Libra Investments.
Indeed, National Australia Bank's research team tentatively
estimated China's GDP growth for the first quarter could be hit
by around 1% point by this deadly coronavirus outbreak.
"The impact on Chinese growth could be significant given the
outbreak coincides with the Chinese New Year," said Tapas
Strickland, NAB's director of economics.
"Measures to isolate the outbreak has meant 26 million
people in cities or near urban areas are in lockdown or have
limited travel. New Year festivities are also curbed in Beijing
and Macau."
The stance taken by WHO over epidemic provided enough relief
for U.S. markets to advance further. The Nasdaq Composite .IXIC rose 0.2% to a record closing
high, while the S&P 500 .SPX added 0.1% and the Dow Jones
Industrial Average .DJI eased 0.1%. .N/C
In the currency market, the concerns about the virus
supported the safe-haven yen.
The Japanese currency traded at 109.47 per dollar JPY= ,
having risen to a two-week high of 109.26 yen on Thursday.
The euro EUR= fell to a seven-week low versus the dollar
of $1.1036 overnight after the European Central Bank left its
policy rates unchanged but President Christine Lagarde struck a
slightly dovish tone than some had expected.
The common currency last stood at $1.1053, down a marginal
0.05% on the day.
The offshore yuan CNH= softened to 6.932 per dollar, one
day after hitting a 2-1/2 week low of 6.942 yuan.
Coronavirus fears continued to weigh on commodity prices.
Oil prices remained under pressure on growing concern that
fuel demand will weaken as the spread of a respiratory virus
from China dents travel and darkens the economic outlook. O/R
Brent crude futures LCOc1 shed as much as 0.16% to below
$62 a barrel in early Asian trade on Friday, its lowest since
Dec. 4, after falling 1.9% the previous session.
U.S. West Texas Intermediate (WTI) futures CLc1 declined
as much as 0.22% to $55.47 and were on course for a 5% fall for
the week.
Elsewhere, copper prices fell to their lowest in more than
six weeks overnight. MET/L
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