* U.S. Fed unhappy with inflation under 2%
* Virus death toll rises, WHO to reconsider declaring
emergency
* Stocks soft, safe-haven assets sought
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, Jan 30 (Reuters) - Asian stocks slipped while
gold and bonds were in demand on Thursday as worries about the
spread of a new virus from China sent investors heading for
safety.
The Federal Reserve kept interest rates unchanged on
Wednesday, as expected, although bank Chairman Jerome Powell's
comments about a low inflation outlook added to U.S. government
bonds' appeal.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.8% to an almost seven-week low. Japan's
Nikkei .N225 fell 1%. Hong Kong's Hang Seng .HSI extended
Wednesday's drop and Taiwan's benchmark index .TWII opened
1.5% lower in its first session since the Lunar New Year break.
Yields on benchmark 10-year U.S. Treasuries, which fall when
prices rise, tumbled nearly 9 basis points overnight to 1.5790%,
and drifted lower to 1.5750% in Asian trade US10YT=RR , not far
above a three-month low of 1.5700% hit on Tuesday.
Gold extended overnight gains to rally 0.2% to $1,579.60 per
ounce XAU= .
U.S. Fed chairman Jerome Powell said, after keeping rates on
hold as expected, that the central bank "is not satisfied with
inflation running below 2% and it is not a ceiling." With the Fed's targeted core inflation running at 1.6%, the
remark was interpreted as scene-setting for a rate cut, with
markets now pricing in a 10% it could come in March. FEDWATCH
Powell also snuffed a small rally in equities on Wall
Street, saying the new coronavirus, which has been spreading
rapidly from its origin in Wuhan, China, added to global
uncertainty.
China's National Health Commission said on Thursday the
total number of confirmed deaths from the coronavirus in the
country climbed to 170 as of late Wednesday, as the number of
infected patients rose to 7,711.
The World Health Organisation's Emergency Committee is due
to reconvene on Thursday to decide whether the rapid spread of
the virus now constitutes a global emergency. "In a matter of days, the coronavirus has shuffled the
cards, and Fed policy is not sitting quite as comfortably," said
Alan Ruskin, Chief International Strategist at Deutsche Bank.
"The Fed, like everybody else, is going to have a tough time
quantifying the scale of the potentially large shock emanating
out of China."
Overnight, Wall Street turned from positive to flat after
the Fed held rates steady. The Dow Jones Industrial Average
.DJI and Nasdaq Composite .IXIC inched about 0.05% higher,
while the S&P 500 .SPX closed 0.1% lower. .N
U.S. stock futures ESc1 traded flat amid a slew of mixed
company results after hours.
Facebook Inc FB.O posted a blowout in costs and slowing
revenue growth, while Microsoft Corp MSFT.O and Tesla Inc
TSLA.O respectively posted profit growth and production
forecasts above expectations.
Seoul-listed Samsung 005930.KS , the world's biggest memory
chip maker and a bellwether of global tech demand, said its
December quarter profit fell by a third, as expected, but
forecast a turnaround in chip prices this quarter.
SARS 2.0?
Elsewhere, risk currencies and oil paused their recent slide
as investors assessed the possible fallout from the virus.
The offshore Chinese yuan CNH= , which had strengthened on
Wednesday, was again waning - though not by much - to 6.9750 per
dollar.
The export-driven Aussie dollar AUD=D3 was steady, while
the safe havens of the Japanese yen JPY= and Swiss franc
CHF= nudged a little higher.
Oil prices, which have been sliding in anticipation of the
virus hurting global demand, sat close to lows touched on
Monday. U.S. crude CLc1 last traded 0.56% lower at $53.03 a
barrel. Brent crude LCOc1 settled at $59.81 per barrel.
Most analysts have looked to the impact from the 2002-2003
spread of Severe Acute Respiratory Syndrome (SARS), which
pounded tourism and confidence, albeit briefly.
J.P. Morgan economists on Thursday said a big negative shock
in the current quarter could knock China's growth from a
previously-forecast 6.3% to 4.9%, for a year-on-year figure of
5.6%. ING economists made a similar forecast on Wednesday.
J.P. Morgan expects a rebound to 7% in the next quarter,
assuming current control measures can contain the virus.
"The SARS episode in 2003 suggests that the shock could lead
to a large impact on economic activity, especially as the fear
factor could restrict people's mobility," the bank's analysts
wrote.
"The spillover effect from China to the rest of world tends
to be much larger than the SARS episode, both in terms of a
demand shock and a supply shock," they added, pointing out
China's share of the world economy has more than trebled since
then.