Shares fell in Asia on Thursday after President Donald Trump announced the U.S. was stepping up its efforts to combat the virus outbreak that began in China.
Japan’s Nikkei 225 index NIK, -2.13% lost 2.1%, while in Australia, the S&P ASX/ XJO, -0.75% dropped 0.8%. In South Korea, where 334 new cases of the virus were reported, the Kospi 180721, -1.05% dropped 0.9% as the country’s central bank surprisingly kept interest rates unchanged. Hong Kong’s Hang Seng HSI, +0.02% lost 0.7%. Shares also fell in Jakarta JAKIDX, -2.44% , Malaysia FBMKLCI, +0.44% , Singapore STI, -0.44% and Taiwan Y9999, -1.24% .
Trump told reporters he was open to spending “whatever’s appropriate” to fight the virus, after the Senate Democratic Leader Chuck Schumer of New York suggested $8.5 billion instead of the requested $2.5 billion. He put Vice President Mike Pence in charge of the effort.
But health officials standing beside Trump warned more infections are coming. And shortly after Trump spoke, the government announced that another person in the U.S. was infected — someone in California who appears not to have the usual risk factors of having traveled abroad or being exposed to another patient.
Major U.S. stock indexes gave up early gains, closing mostly lower Wednesday and extending the market’s heavy losses for the week.
“The market is still digesting the full impact of what the coronavirus could mean for global GDP growth and, more importantly, on earnings growth for a lot of companies,” said Nadia Lovell, U.S. equity strategist at J.P. Morgan Private Bank.
The S&P 500 index SPX, -0.38% fell 0.4% to 3,116.39. It’s on track for its biggest monthly decline since May. The Dow Jones Industrial Average DJIA, -0.46% dropped 123.77 points, or 0.5%, to 26,957.59, for a three-day loss of 2,034 points. A modest rally in technology stocks helped nudge the Nasdaq composite COMP, +0.17% to a 0.2% gain, to 8,980.77.
Bond yields headed lower for much of the day, but then recovered mostly. The yield on the 10-year Treasury inched up to 1.34% from 1.33% late Tuesday. The yield on the 3-month Treasury bill edged up to 1.51%. The inversion in the yield between the 10-year and the 3-month Treasurys is a red flag for investors because it has preceded the last seven recessions.
“The bond market is sending us some warning signals that we should pay attention to and that’s what you see playing out in the market today,” Lovell said.
Investors have been moving more money into bonds in the wake of the outbreak. Traders are concerned the global economy could slow down as the world’s second-largest economy struggles to contain the outbreak.
“A slowdown definitely is on the horizon, but it’s transitory,” Lovell said. “I would expect economic growth to reaccelerate in the back half of the year as China starts to come online.”
Benchmark crude oil CLJ20, -1.23% fell 76 cents to $47.98 in electronic trading on the New York Mercantile Exchange. On Wednesday it lost $1.17 to settle at $48.73 a barrel. Brent crude oil BRNJ20, -1.12% , the international standard, shed 75 cents to $52.06 per barrel. It dropped $1.52 to close at $53.43 a barrel.
The dollar USDJPY, -0.23% fell to 110.19 Japanese yen from 110.40 yen on Wednesday.
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February 27, 2020 at 12:03PM
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