Asian stocks slide deeper as pandemic fears grow

FILE PHOTO: A man wearing a surgical mask walks past a screen showing Shanghai Composite index and Nikkei index outside a brokerage in Tokyo, Japan February 3, 2020. REUTERS/Kim Kyung-Hoon

SINGAPORE (Reuters) – Oil and Asian share markets extended losses on Thursday as the rapid global spread of the coronavirus kept investors on edge and seeking safety in gold and bonds.

Rising fears of a pandemic, which U.S. health authorities have warned is likely, had already wiped more than $3.6 trillion from global stock markets by Wednesday’s close.

China accounts for about 96% of cases and has instituted dire containment methods that have paralysed global supply chains.

But most new infections are now being reported elsewhere, with news on Thursday of a jump in cases in South Korea accompanied by a warning that the virus may be spreading in California..

South Korea reported 334 new cases on Thursday, its largest daily rise since its first case was confirmed on Jan. 20. China reported 433 new infections.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.5% and is down more than 4% for the week.

Australia’s S&P/ASX 200 dropped 1% by lunchtime and has lost 7% this week. Japan’s Nikkei .N225 fell 1.7% to its lowest since October. The Hang Seng .HSI fell 1%. Gold climbed 0.7% XAU=.

“The market was complacent until last week as central banks and governments were at the rescue,” said Desh Peramunetilleke, head of microstrategy at Jefferies in Hong Kong.

“The rising infection cases beyond Chinese shores has certainly raised the pandemic risk,” he said. “The current earnings estimates do not yet factor in such risk and are therefore vulnerable to further downgrades.”

A show of confidence from President Donald Trump, who sought to play down the risks to the United States at a White House press conference, offered little solace to traders focused on the virus’ spread.

U.S. stock futures ESc1 fell as far as 1% as he spoke, while European stock futures STXEc1 fell 2% in Asian trade, suggesting a possible catch-up drop in stocks there.

Fresh record-low yields on benchmark 10-year U.S. Treasuries overnight, and the morning’s firm demand for dollars, yen and Swiss francs underscored the worried mood.

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