Dow futures dropped 1,000 points as Mr Trump‘s speech failed to quell concerns over the possible economic slowdown from the coronavirus, CNBC reported
TOKYO (REUTERS, BLOOMBERG) – Stocks plummeted in Asia on Thursday (March 12) after United States President Donald Trump suspended all travel from Europe for 30 days , a day after the US Dow Jones industrials entered bear market territory and world health officials declared the coronavirus a pandemic .
Shares in Japan sank and Australian equities extended recent losses, getting little respite from that nation’s stimulus package.
The WHO declaration rattled traders who were already on edge, with the Trump travel ban ratcheting up fears the spreading virus will plunge the global economy into a recession. The travel ban excludes Britain.
Dow futures dropped 1,000 points as Mr Trump‘s speech failed to quell concerns over the possible economic slowdown from the coronavirus, CNBC reported.
Signs that companies in the hardest-hit industries were drawing down credit lines to battle the effects of the virus on their businesses added to anxiety. The haven bid in Treasuries showed signs of returning after it gave way to a rush of selling on Wednesday, with traders scrambling to unload their most easily traded assets – even the safest ones.
“The ferocity of the sell-off reflects a massive swing in investor sentiment from complacency to panic,” said Mr Paul O’Connor, head of multi-asset at Janus Henderson Investors. “Whereas just a few weeks ago, investors were anticipating a V-shaped recovery in global growth, they are now pricing in a high probability of a global recession.”
Japan’s Nikkei index plunged 4.4 per cent while Australia’s S&P/ASX dived 4.8 per cent and South Korea’s Kospi index was down 3.8 per cent at the open. Opening later in Asia, Hong Kong’s Hang Seng index was down 3.2 per cent and the Shanghai Composite Index fell 1.2 per cent.
Singapore stocks were also caught up in the maelstrom, with the Straits Times Index (STI) entering a bear market, having fallen more than 20 per cent from its recent high. The STI was trading down 106.75 points or 3.8 per cent to 2,676.97 as of 10.03am.
On Wednesday, the S&P 500 lost 4.89 per cent while the Dow Jones Industrial Average fell 5.86 per cent to extend its fall from a record peak hit a month ago to more than 20 per cent, entering what is known as a “bear market”.
European shares closed at a 14-month low even after Britain announced a US$39 billion (S$54 billion) war chest to soften the impact of the coronavirus.
The FTSE 100 closed down 1.6 per cent, extending a slump into a fifth day, as investors doubted whether the stimulus and the rate cut would be enough to counter the shock from the coronavirus outbreak.
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Gold dipped to US$1,640.7 per ounce from Monday’s high above US$1,700.
The 10-year US Treasuries yield rose back to 0.878 per cent, more than 50 basis points above a record low of 0.318 per cent touched on Monday. Some analysts say the rise could reflect worries about an increase in government spending for stimulus.
The two-year yield also jumped back to 0.525 per cent compared to Monday’s low of 0.251 per cent.
But rising yields by no means suggest any easing in expectations of Fed rate cuts.
Fed fund rate futures are pricing in a rate cut of at least 0.75 percentage points and about a 30 per cent chance of a 1.0 percentage point cut at a policy review on March 17-18.
Oil prices were wobbly, having fallen about 4 per cent on Wednesday, on renewed weakness in the stock market and as Saudi Arabia and the United Arab Emirates announced plans to escalate the burgeoning price war.
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In the currency market, the dollar slid against the safe-haven yen and the Swiss franc.
The US currency stood at 104.63 yen and 0.9392 franc.
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