Business / Financial Markets

Stocks tumble with oil; yen climbs with Treasuries as fears over coronavirus deepen

Bloomberg, Kyodo

Stocks and crude oil prices tumbled, and havens including the yen, gold and Treasuries jumped, as fears deepened about the rising impact of the deadly coronavirus.

With no sign of the disease’s containment, traders rushed out of risk assets. Contracts on the S&P 500 index fell more than 1 percent before paring losses. The Nikkei 225 average tumbled over 2 percent at one point. Futures on Chinese shares fell more than 5 percent as the country extended its Lunar New Year holiday. Oil dropped over 2 percent in New York, while 10-year Treasury yields sank to the lowest since October.

The moves came on a day with limited trading options in Asia, as markets were shut in locations including China, Hong Kong, South Korea and Australia due to holidays.

Gold jumped as the spread of the coronavirus globally spurred demand for haven assets.

Prices rose as much as 1.1 percent as risk-off sentiment swept markets.

On the Tokyo Stock Exchange, airlines and retailers were hurt as China banned group overseas travel by its citizens for the Lunar New Year holiday in response to the health situation.

Tourism-related issues met with selling amid fears that the spread of the virus could weigh on the number of tourists to Japan. Marine transportation issues were also among the decliners.

With many Asian financial markets closed for the holiday, “investors focused on selling stocks in Tokyo due to uncertainty about how far the infection would spread,” said Maki Sawada, vice president of the investment research and investor services department at Nomura Securities Co.

“Concerns about the global economy have been increasingly raised” as the crisis disrupts Chinese businesses and travel, Sawada said.

China announced an unspecified extension to the weeklong holiday, amplifying the economic impact. Beijing also suspended sales of package tours, hitting firms around the world that rely on Chinese travelers’ spending.

“I’m starting to think cash is the right place to be for the next few weeks,” Stephen Innes, chief Asia market strategist at Axitrader, wrote in a note Monday. “Any economic shock to China’s colossal industrial and consumption engines will spread rapidly to other countries through the increased trade and financial linkages associated with globalization.”

The virus news is coinciding with an earnings season in full swing. Apple Inc., Facebook Inc. and Samsung are among those due to report this week. Investors will also have a Federal Reserve policy meeting and Mark Carney’s last monetary policy decision as the Bank of England’s governor to monitor.

Your news needs your support

Since the early stages of the COVID-19 crisis, The Japan Times has been providing free access to crucial news on the impact of the novel coronavirus as well as practical information about how to cope with the pandemic. Please consider subscribing today so we can continue offering you up-to-date, in-depth news about Japan.

Coronavirus banner