Coronavirus: Asian stocks follow US into the red as infections near 100,000
Coronavirus cases approached the 100,000 mark today as volatility sparked by the global spread of the Covid-19 disease hurt Asian stocks and Wall Street.
Asian stocks endured a torrid day of trading as Japan’s Nikkei plunged 2.7 per cent and Hong Kong’s Hang Seng index sank 2.3 per cent overnight.
Asian stocks slumped as traders reacted to estimates of a major hit to the world economy from coronavirus.
Asia Development Bank analysis found the potential impact of the coronavirus outbreak on the global economy global could be anywhere between $77bn and $347bn.
And Wall Street endured an even worse day of trading yesterday. The S&P 500 closed 3.4 per cent down while the Dow Jones sank even deeper, down 3.6 per cent.
The Nasdaq plummeted 3.1 per cent as economists predicted a tough day of trading for the FTSE 100, which fell 1.6 per cent yesterday.
“Equity markets were marked by wild upside and downside swings this week, moving in a completely random pattern and furiously rejecting all support from governments and central banks,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said.
With no news of a vaccine being close, the UK reported its first death yesterday amid a jump of 31 cases to 116 coronavirus infections.
Meanwhile, across the world coronavirus cases hit 98,387. Now 3,383 people have died from it, and 55,441 have recovered.
Traders are now predicted the Bank of England will slash interest rates to 0.5 per cent later this month.
But David Madden, an analyst at CMC Markets, warned authorities’ measures to prop up their economies could backfire.
“Dealers [have] started to wonder how bad is the crisis if all these governments are so desperate to announce packages aimed to alleviating the problem,” he said. “At a certain point, government intervention increases nervousness, and that is what we saw yesterday.”
Italy has directed b3.6bn for economic stimulus in a move that will break its budget deficit limit. And Japan has also vowed to intervene to save its struggling economy. And oil cartel Opec has agreed to slash production by another 1.5m barrels per day.
Meanwhile, the US Federal Reserve promised to slash rates by 0.5 percentage points.
However, that did not stop US stocks from dropping again yesterday.
Connor Campbell, Spreadex financial analyst, said: “Investors appear to be caught between the brief bursts of optimism that tend to greet the various stimulus announcements we’ve seen, and the growing awareness that the coronavirus isn’t going away any time soon.
“Its economic impact will hurt sectors far beyond those– like travel firms and commodity stocks – that immediately come to mind.”