More Markets Enter Corrections as Coronavirus Spooks Investors - The Wall Street Journal

Japan’s Nikkei 225, South Korea’s Kospi and Australia’s S&P/ASX 200 all fell more than 3% on Friday, putting the benchmarks into corrections.

Photo: Cris Faga/Zuma Press

By

Chong Koh Ping

Updated Feb. 28, 2020 2:20 am ET

Global shares tumbled further Friday on growing worries that the economic fallout from the global spread of the coronavirus may be more severe than previously expected.

Japan’s Nikkei 225, South Korea’s Kospi and Australia’s S&P/ASX 200 all fell more than 3%, putting the benchmarks into corrections, or a decline of at least 10% from a recent peak. U.S. indexes slipped into correction territory Thursday as the market rout continued to deepen.

Hong Kong’s Hang Seng Index dropped 2.7% while the Shanghai Composite retreated 3.7%.

Trading day

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The coronavirus has sickened more than 82,000 people globally and killed more than 2,800. It has spread to at least 46 countries, according to the latest tally by the World Health Organization. On Friday, China reported 327 new cases—the lowest since Jan. 23—and 44 deaths.

“The base case was for the outbreak to be contained in China and peak at the end of the first quarter of 2020,” said Paul Chew, head of research at Phillip Securities in Singapore.

“With cases now spreading even faster outside China and U.S. companies starting to issue profit warnings over this outbreak, the market is repricing due to the severity of this outbreak,” he said. Mr. Chew said he expected markets to trend down further until the rate of new infections began to stabilize.

S&P 500 futures slipped 1.4% in after-hours trading, indicating further declines are likely when the U.S. markets open Friday. This comes as the benchmark notched its largest single-day percentage drop since August 2011 on Thursday. The index entered a correction from its highest ever closing level in just six trading days, plunging 12% from its Feb. 19 peak.

The latest moves in the Asia-Pacific region added fresh losses to a selloff that, since starting last week, has already erased trillions of dollars in stock-market value.

The FTSE All World index, for example, has fallen almost 10% in six straight sessions of declines through Thursday. That cut its market value by roughly $5.2 trillion to about $47.1 trillion, according to Refinitiv Datastream.

Stocks in the materials, energy, transportation and financial sectors have seen some of the steepest declines, fueled by worries about an economic slowdown, travel bans and disruptions to global supply chains.

This year, Hong Kong-listed stock in PetroChina has fallen 22%, while shares in HSBC Holdings and Industrial & Commercial Bank of China, China’s biggest bank, have both fallen about 11% in the city. Mining giant BHP’s Sydney-traded shares tumbled Friday, taking its year-to-date losses there above 13%.

Reflecting those worries about demand for natural resources, crude oil prices were again under pressure Friday. Brent crude, the global benchmark, shed 2.7% to $50.78 a barrel, according to Futuresource.

Internet and health-care stocks have bucked the broader trend. While shares in Chinese online-gaming giant Tencent fell 3% on Friday, they are still up 3% for the year.

In other markets, demand remained high for haven assets. Gold was little changed, dropping 0.1% to $1,640 a troy ounce. The yield on the 10-year U.S. Treasury note, which has already plumbed record lows in recent days, slipped to 1.251%, according to FactSet data.

Willie Chan, Kim Eng Securities’ regional strategist in Hong Kong, said Asian markets had already priced in much of the likely hit to first-quarter earnings. He said while it was too early to say whether summer heat would kill the virus, that could release a lot of pent-up demand.

Write to Chong Koh Ping at chong.kohping@wsj.com

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https://www.wsj.com/articles/more-markets-head-toward-correction-territory-as-coronavirus-spooks-investors-11582864550

2020-02-28 07:20:00Z
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