As Coronavirus Spreads, Markets Continue to Slump - The New York Times

Fears of the coronavirus’s impact on the global economy gripped investors in Asia for a second day as a sell-off in markets continued on Tuesday.

Investors dumped stocks that they thought would be worst hit by the outbreak and began trying to assess the long-term economic effects of the epidemic.

The pneumonialike illness is spreading, killing 106 people and sickening more 4,500. Health officials in the United States are warning that travelers should avoid nonessential trips to China, while global businesses are restricting travel. The Chinese government extended the Lunar New Year holiday, which could disrupt production and hurt the country’s growth.

The concern is that the fallout could create a major shock for markets, even as worries about geopolitics and global trade have eased.

Many of the region’s stock markets were closed for the Lunar New Year holiday, but those that were open, including Japan’s and South Korea’s, fell and futures trading in China slumped. Money poured into safe-haven assets like gold and pushed up the value of the United States dollar.

Japan’s economy minister said on Tuesday that the Chinese outbreak would affect the Japanese tourism industry and warned that it could also hurt exports and corporate profits. Chinese tourists traveling to Japan accounted for 30 percent of all tourists in 2019, he said at a news conference.

“There are concerns over the impact to the Chinese and global economy from the spread of infection in China, transportation disruptions, cancellation of group tours from China and an extension in the Lunar holiday,” said the minister, Hiroshi Kajiyama.

In Tokyo, investors pushed stocks down by nearly 1 percent. In Seoul, stocks fell by more than 3 percent. Hong Kong’s stock market will reopen on Wednesday. In China, where authorities have extended the New Year holiday by a week, the major exchanges in Shenzhen and Shanghai said they would remain closed until Feb. 3.

“The Coronavirus is the No. 1 threat to financial markets currently as global investors are becoming jittery on the uncertainty,” said Nigel Green, the founder of the investment group deVere Group.

“This is a worrying and serious situation and investors must be vigilant,” he added.

The price of oil fell early on Tuesday — before regaining those losses — amid fears that the virus would dampen demand for fuel.

China’s appetite for oil has grown at around 5.5 percent annually, making it an important buyer in the global market. The country has already imposed travel restrictions and any extension could further dampen demand.

“The question isn’t whether coronavirus will depress global oil demand,” wrote Ryan Sweet, head of monetary policy research at Moody’s Analytics. “Rather, the question is by how much.”

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https://www.nytimes.com/2020/01/28/business/coronavirus-financial-markets.html

2020-01-28 08:04:00Z
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