AFP – Asian markets on Wednesday extended this week’s global rally following a fresh record in New York, while safe havens retreated as concerns about the impact of the deadly China virus eased.
Despite Beijing announcing that almost 500 people had died from the outbreak and more than 24,000 were infected, analysts said traders were taking heart from the fact that the spread outside China had not spiralled.
Moves by Chinese authorities to support mainland stocks were also providing cheer, with the central bank pumping tens of billions of dollars into financial markets and the government easing restrictions on equities trading.
There had been a worry that the virus could hammer the global and Chinese economies, which had been showing signs of stabilising in recent months following a protracted growth slowdown.
World Bank head David Malpass said the group plans to lower its global growth forecast owing to an expected hit to China and the likely impact on global supply chains.
But Lisa Shalett at Morgan Stanley told Bloomberg TV: “These… dislocations tend to be short-lived, and do tend to produce very good entry points and buying opportunities.”
In morning trade, Shanghai rose 1.9 percent, building on the previous day’s 1.3 percent advance and digging further into the losses of more almost eight percent suffered on Monday. Hong Kong rose 0.9 percent and Tokyo went into the break more than one percent higher.
Sydney gained 0.3 percent, Singapore was up 0.5 percent and Seoul climbed 0.8 percent, with Manila, Taipei, Jakarta and Wellington also well in positive territory.
– Havens in retreat –
“After a very cold end to last week and a negative post-holiday catch up move by China’s equity market on Monday, markets have now embarked on a new rebound,” said Rodrigo Catril of National Australia Bank.
He said the gains had been “spurred by China’s efforts to support its economy alongside an apparent decline in concerns over the coronavirus impact on the global economy”.
AxiCorp strategist Stephen Innes also pointed out that central bankers were showing limited worry about the long-term impact of the outbreak, adding that “markets look to be shrugging off coronavirus concerns. At least for now.”
The rally in riskier assets saw investors shift out of safer investments, with gold shedding one percent Wednesday, while the Japanese yen was sitting at its weakest since January 24, having hit a four-week high on Monday.
However, oil prices are wallowing around one-year lows on concerns that demand in China will be hammered by the virus, with millions of people in the country in lockdown and prevented from travelling.
Both main contracts staged a one percent rally Wednesday but there are fears of further losses this year.
“The oil market is falling sharply, which is pretty alarming given (producer cartel) OPEC is considering an emergency cut,” Innes said. “But the implied near-term conservative fall in demand from China could create a supply/demand imbalance” of more than a million barrels a day in the first quarter.
– Key figures around 0230 GMT –
Shanghai – Composite: UP 1.9 percent at 2,835.00
Hong Kong – Hang Seng: UP 0.9 percent at 26,904.57
Tokyo – Nikkei 225: Up 1.2 percent at 23,350.00 (break)
Dollar/yen: DOWN at 109.46 yen from 109.52 yen at 2200 GMT
Euro/dollar: DOWN at $1.1035 from $1.1046
Pound/dollar: DOWN at $1.3018 from $1.3029
Euro/pound: UP at 84.77 pence from 84.76 pence
Brent Crude: UP 1.2 percent at $54.63 per barrel
West Texas Intermediate: UP 1.2 percent at $50.18 per barrel
New York – DOW: UP 1.4 percent at 28,807.63 (close)
London – FTSE 100: UP 1.6 percent at 7,439.82 (close)