TOKYO, Jan 24 — Asian shares held their ground today 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 rose 0.1 per cent, while Japan’s Nikkei eased a marginal 0.05 per cent and Australian stocks added 0.3 per cent.
Trade in Asia is already slowing down for the Lunar New Year holiday, with financial markets in China, Taiwan and South Korea closed to.
“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 per cent 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 US markets to advance further.
The Nasdaq Composite rose 0.2 per cent to a record closing high, while the S&P 500 added 0.1 per cent and the Dow Jones Industrial Average eased 0.1 per cent.
In the currency market, the concerns about the virus supported the safe-haven yen.
The Japanese currency traded at 109.47 per dollar, having risen to a two-week high of 109.26 yen yesterday.
The euro fell to a seven-week low versus the dollar of US$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 US$1.1053, down a marginal 0.05 per cent on the day.
The offshore yuan 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.
Brent crude futures shed as much as 0.16 per cent to below US$62 a barrel in early Asian trade today, its lowest since December 4, after falling 1.9 per cent the previous session.
US West Texas Intermediate (WTI) futures declined as much as 0.22 per cent to US$55.47 and were on course for a 5 per cent fall for the week.
Elsewhere, copper prices fell to their lowest in more than six weeks overnight. — Reuters
