Asia markets edged up in early trade on Wednesday after tumbling a day before, with investors closely monitoring China’s progress in returning to work as the country deals with the coronavirus outbreak.
Japan’s Nikkei 225 returned to positive territory, rising 0.37% on Wednesday after falling more than 1% a day earlier. The Topix was up 0.28%.
On Monday, data showed Japan’s growth declining much worse than expected, shrinking the fastest in six years. Its outlook was also dimmed by the impact of coronavirus hitting the economy.
Japan released its trade data for January, showing that exports fell 2.6% year-on-year, less than the 6.9% drop expected by economists in a Reuters poll. In December, Japan’s exports fell 6.3%.
South Korea’s Kospi was up 0.28% in early trade, while Australia’s ASX 200 was flat in the morning.
U.S. stocks overnight tracked yesterday’s fall in Asia markets, after Apple‘s warned that it does not expect to meet its quarterly revenue forecast, and cited slowed production and weakened demand in China as a result of disruptions from the outbreak.
The Dow Jones Industrial Average fell for a third consecutive day on Tuesday after a return from a holiday. Apple closed 1.8% lower, with the news sparking a selloff in stocks of its Asia suppliers the day before.
The impact of the outbreak on businesses in China and around the world has dragged down economic growth forecasts for the year. Moody’s Investors Service yesterday lowered the growth forecast for China from 5.8% to 5.2% for 2020.
The offshore yuan weakened past the 7 level again on Tuesday, to 7.0109 yuan per dollar. On Wednesday morning, it was at 7.0034.
Singapore, one of the worst hit by the outbreak outside China, unveiled its budget on Tuesday. The Southeast Asian nation said it has set aside 5.6 billion Singapore dollars ($4.02 billion) in the coming year to help businesses and households tide through the ongoing coronavirus outbreak.
Singapore’s benchmark Straits Times index closed 0.51% lower on Tuesday.
China’s return to work after its extended shutdown will be closely tracked. State media reported on Tuesday that more than 80% of its central state-owned enterprises’ roughly 20,000 manufacturing subsidiaries have resumed work.
But Rodrigo Catril, senior foreign exchange strategist at the National Australia Bank, cast doubt on the actual progress, in a note on Wednesday. “This news should have been embraced warmly by the market, however high frequency data such as pollution levels and traffic congestion gauges in Beijing do not at this stage corroborate the upbeat official message, keeping investors wary,” he said.
“There were moments of optimism around restarts of business activities in China … following China’s stimulus announcements,” ANZ Research’s John Bromhead said in a note. “However, these waned after key companies raised concerns about the impact of supply and demand disruptions.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 99.440, rising from an earlier low of 99.139.
The Japanese yen traded at 109.91 against the dollar, little unchanged after hitting above the 110 level briefly last week. The Australian dollar slid to 0.6691, from above the 0.67 level earlier this week.
— CNBC’s Yen Nee Lee contributed to this report.