(Bloomberg) -- Stocks and U.S. futures took a modest dive in morning trading in Asia, with Hong Kong equities opening to a slide in excess of 1%.
The yen and U.S. Treasuries advanced as a broad risk-off move developed, with gold edging higher. China’s yuan dropped. Market participants attributed the moves to worries over China’s coronavirus, after reports indicating mounting evidence of its contagiousness among humans. Seven straight weekly advances in the MSCI Asia Pacific Index might also have left some investors looking for a short-term exit point from equities.
“As Chinese citizens travel home for the Lunar New Year, more cases of the new virus have been reported and it seems it is spreading,” said Zhou Hao, a senior emerging markets economist at Commerzbank AG. “There is a risk of an exponential outbreak” along the lines of the 2003 SARS virus, Zhou said.
Still, stock declines were modest for the time being. Futures on the S&P 500 Index were down less than 0.5%. Recent economic indicators have supported the case for a global recovery in 2020 after last year’s slowdown. News that the U.S. and France have reached a truce in their dispute over French moves to tax American tech companies also suggested that trade-war worries may keep subsiding.
“For the market, the more meaningful driver still remains the economic cycle and earnings momentum,” Fan Cheuk Wan, Asia chief market strategist at HSBC Private Bank, said on Bloomberg TV. “Based on previous experience we have come across during SARS, the impact of the virus is likely to be short lived,” she said.
Hong Kong’s market also opened to news that Moody’s Investors Service had downgraded the city’s rating. The agency cited concerns about a failure to address political, economic and social concerns in wake of the protests there.
Here are some events to watch out for this week:
Companies including Netflix, IBM, UBS, Procter & Gamble and Hyundai will post results.Policy decisions are due from central banks including Japan, Canada, Indonesia and the European Central Bank.The World Economic Forum, the annual gathering of global leaders in politics, business and culture, opens in Davos, Switzerland.
These are the main moves in markets:
Stocks
Japan’s Topix Index fell 0.6% as of 10:44 a.m. in Tokyo.Kospi Index dropped 0.6%.S&P/ASX 200 dipped 0.5%.Futures on the S&P 500 Index fell 0.4%.Hang Seng Index slid 1.9%.Shanghai Composite fell 0.7%.
Currencies
The Japanese yen gained 0.2% to 109.98 per dollar.The euro was little changed at $1.1091.The British pound was at $1.2998.The offshore yuan fell 0.3% to 6.8878 per dollar.
Bonds
The 10-year U.S. Treasury yield fell about two basis points, to 1.80%.Australian 10-year yields were little changed at 1.17%.
Commodities
WTI crude futures rose 0.1% to $58.63 per barrel.Gold gained 0.4% to $1,566 an ounce.
--With assistance from Livia Yap and Eric Lam.
To contact the reporter on this story: Cormac Mullen in Tokyo at cmullen9@bloomberg.net
To contact the editor responsible for this story: Christopher Anstey at canstey@bloomberg.net
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