Asia report: Markets sink further as investors watch virus spread
By Josh White
Date: Wednesday 26 Feb 2020
(Sharecast News) - Markets in Asia sank further on Wednesday, as investor concerns around the spread of the Covid-19 strain of coronavirus beyond China grew.
In Japan, the Nikkei 225 was down 0.79% at 22,426.19, as the yen weakened 0.22% against the dollar to last trade at JPY 110.44.
Of the major components on the benchmark index, automation specialist Fanuc was down 1.33%, Uniqlo owner Fast Retailing lost 0.16%, and technology giant SoftBank Group was 0.82% weaker.
The broader Topix was 0.75% weaker by the end of trading in Tokyo, settling at 1,606.17.
On the mainland, the Shanghai Composite was off 0.83% at 2,987.93, and the smaller, technology-heavy Shenzhen Composite was 2.71% weaker at 1,890.60.
South Korea's Kospi was off 1.28% at 2,076.77, while the Hang Seng Index in Hong Kong was 0.73% lower at 26,696.49.
The special administrative region took the wraps off its budget on Wednesday, promising HKD 120bn in measures to help Hong Kong's economy in the wake of the coronavirus outbreak and several months of pro-democracy protests.
Both of the blue-chip technology stocks in Seoul sank, with Samsung Electronics down 2.42% and SK Hynix off 3.47%.
Investors were watching for updates on the coronavirus outbreak amid signs that it was spreading rapidly outside of China, with cases spiking in both South Korea and Italy, and new cases being reported in a number of other countries.
"What we appear to be seeing is the realisation that global economic growth could well come to a halt as the combined effects of a flu virus and belated attempts to stem the spread of it across the globe, raise the prospect of an economic sneeze, as consumers stop spending, and supply chains seize up, due to workers and consumers staying at home," said CMC Markets' chief market analyst Michael Hewson.
"Over the last 12 months or so the consumer has been the one remaining pillar that has been carrying the global economy, helping in the process to push stock markets up to their recent records.
"Now that politicians have started to close borders, impose restrictions on movement, as well as impose quarantines, investors appear to be preparing the ground for the inevitable profit and revenue downgrades that are likely to appear in the coming weeks and months."
Oil prices were lower at the end of the Asian day, with Brent crude last down 1.91% at $53.92 per barrel, and West Texas Intermediate off 1.42% at $49.20.
In Australia, the S&P/ASX 200 was off 2.31% by end-of-play in Sydney, at 6,708.10, as the big four banks led the hefty financials subindex south.
Australia and New Zealand Banking Group was down 1.96%, Commonwealth Bank of Australia lost 1.67%, National Australia Bank slid 2.09%, and Westpac Banking Corporation was 1.67% lower.
Those movements came after fresh data out of Canberra showed a decline in the value of construction work in the sunburnt country in the December quarter.
The seasonally-adjusted value of total construction work in the three months to the end of December was down 3% on the prior quarter, according to the Australian Bureau of Statistics.
Across the Tasman Sea, New Zealand's S&P/NZX 50 was down 1.58% to close at 11.533.85, with travel and transport stocks under pressure in Wellington amid the coronavirus outbreak.
Port of Tauranga, which operates the country's largest international port, was down 5.5%, while airport operator AIAL lost 1.5%, flag carrier Air New Zealand was off 2.8%, and Tourism Holdings fell 3.8%.
Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.51% at AUD 1.5226, and the Kiwi retreating 0.37% to NZD 1.5875.
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