Asian and European equities yesterday spiraled downwards, extending a collapse in world markets that has wiped trillions of US dollars off valuations as COVID-19 spreads rapidly with the WHO warning that the outbreak was now at a “decisive point.”
Tokyo, Shanghai, Sydney, Singapore and Seoul were among the exchanges that fell more than 3 percent while Jakarta was hammered more than 4 percent. The losses have put equities on course to record their worst week since the global financial crisis more than a decade ago, and there are warnings there could be worse to come.
The Dow suffered its biggest points loss on record, shedding almost 1,200 points, while its 4.4 percent drop marked the worst performance in two years. The S&P 500 and NASDAQ also fell more than 4 percent.
The VIX “fear” index is now at its highest level since 2011 during the European debt crisis.
US President Donald Trump blamed the market drop on the media coverage of COVID-19 and worries about Democrats winning the White House race.
The heavy selling came as authorities in California said they were monitoring 8,400 people for COVID-19 after officials confirmed a woman had contracted it without traveling to any of the outbreak-hit regions.
“Even though the market is pricing in the fear of economic issues and disease hitting the US, we haven’t actually seen the emergence of clusters” in the US, Steve Englander of Standard Chartered told Bloomberg TV. “Once that happens we will see another sell-off.”
After Thursday’s performance, Tokyo fell 3.7 percent, Shanghai 3.7 percent, Seoul 3.3 percent and Sydney 3.3 percent.
Hong Kong retreated 2.4 percent, while Singapore sank 3.1 percent, Jakarta 4.1 percent and Bangkok 3.4 percent.
Mumbai was 3.1 percent down and Manila eased 2.5 percent, with Wellington 1.5 percent in the red.
In early trade, London, Paris and Frankfurt each fell 3.3 percent, having all lost more than three percent on Thursday.
Many markets have lost about a 10th of their value in just a week.
The rush to safety has also caused the US dollar to surge against most higher-yielding, riskier currencies, with the New Zealand dollar, the South African rand and the Russian ruble all more than 1 percent lower.
Australia’s dollar, the Indonesian rupiah and the Indian rupee were also sharply down, but the US dollar was well off against the safe-haven yen.
The virus has now killed more than 2,800 people and infected more than 83,000 worldwide, with an increasing number of new cases being reported daily.
Lithuania, New Zealand and Nigeria yesterday reported their first cases, as officials around the world move to contain the outbreak in their countries under growing fears of a pandemic.
The operator of Tokyo Disneyland and DisneySea closed the parks for about two weeks, while Saudi Arabia banned pilgrims from visiting Islam’s holiest sites as the number of deaths jumped in neighboring Iran. Japan and Iraq have also closed schools.
WHO Director-General Tedros Adhanom Ghebreyesus on Thursday said that the world was at a “decisive point” and countries could still contain outbreaks if they “act aggressively now.”
“No country should assume it won’t get cases; that could be a fatal mistake, quite literally. This virus does not respect borders,” Tedros said in Geneva.
The rate of increase in China continues to fall and there are signs the country is slowly creaking back to life with shops reopening, including Starbucks, which has resumed operations at all its outlets.
However, Moody’s Analytics said that the regional economy faced severe repercussions.
“With economic activity in China severely depleted by the virus, the repercussions will flow through to the rest of the region,” it said in a commentary.
Crude prices were again hit, with both main contracts losing more than 2 percent, on expectations the crisis would put a dent in demand. Oil has now fallen more than 20 percent since the start of the year.
Investors are keeping an eye on central banks, particularly the US Federal Reserve, hoping for monetary easing measures, while governments are also facing pressure to provide support.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS