Japan stocks lead losses in Asia, dropping about 3%
Stocks in Asia dropped in Friday afternoon trade as volatility continued to grip the markets amid investor concerns over the global coronavirus outbreak.
Japanese stocks led losses as the Nikkei 225 dropped 2.79%, with shares of index heavyweight and conglomerate Softbank Group plunging 5.99%, as the Topix index fell 2.88%. The Japanese yen, often seen as a safe-haven currency in times of economic uncertainty, traded at 105.81 per dollar after strengthening from lows above 108 earlier this week.
Mainland Chinese stocks edged lower in afternoon trade, with the Shanghai composite down about 0.9% and the Shenzhen component shedding around 0.7%. The Shenzhen composite also slipped 0.331%.
Stocks in Australia also fell, with the S&P/ASX 200 dropping about 2.8%. Australia retail turnover in January fell 0.3% month-on-month on a seasonally adjusted basis, according to the country’s Bureau of Statistics (ABS).
The ABS said it expected the outbreak to “impact aggregate retail trade estimates in coming months,” though there was “no apparent impact on any of the aggregate level data” in the data release for January.
Overall, the MSCI Asia ex-Japan index tumbled 2.33% lower.
Mizuho Bank’s Vishnu Varathan wrote in a note that “there appears to be two strains of infections in the market.”
“One succumbs to the sheer fear of community spread, prospects of deep economic impact from sharp drop off in demand for travel and seizures in supply-chains,” said Varathan, who is head of economics and strategy at Mizuho. “The other is a strain that thrives on hopes of stimulus; be it frantic central bank rate cuts, the lull of liquidity infusions or more targeted fiscal offsets to provide pain relief.”
“As the two strains cross-infect one another, markets will be strained to maintain valuations, and bigger concerns about strains on global health systems and supplies mount,” he said.
Shares of airlines in the region declined on Friday. Australia’s Qantas Airways dropped 7.1% while Japan’s ANA Holdings fell 3.76%. Over in South Korea, Korean Air Lines’ stock plummeted 5.58%. Hong Kong-listed shares of China Eastern Airlines also slipped 4.08%.
The moves came after and American Airlines saw their stocks plummet more than 13% each overnight. The International Air Transport Association, an industry trade group, forecast on Thursday that airlines could lose up to $113 billion in revenue this year — the most since the financial crisis — if the coronavirus continues to spread.
At least 95,270 globally have been infected by the coronavirus so far, while at least 3,280 lives have been taken worldwide, according to the latest figures from the World Health Organization.
Overnight on Wall Street, the Dow Jones Industrial Average dropped 969.58 points to close at 26,121.28 while the S&P 500 fell 3.3% to end its trading day at 3,023.94. The Nasdaq Composite slipped 3.1% to close at 8,738.60.
Stocks stateside fell sharply as the benchmark 10-year Treasury yield fell to an all-time low below 0.9%. The 10-year Treasury yield was last at 0.8207%.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 96.548 after declining from levels above 97.3 yesterday.
The Australian dollar changed hands at $0.6595 after declining from levels above $0.663 yesterday.
— CNBC’s Leslie Josephs contributed to this report.