Asian Stocks Open Mixed as Virus Efforts Assessed: Markets Wrap

Daniel Fowler
February 4, 2020

"The shorter-term uncertainty around the coronavirus is really affecting everything", said JJ Kinahan, a chief market strategist at TD Ameritrade.

With stocks' Monday bounce, the S&P 500 is back in positive territory for the year. The S&P 500 was up 23.40 points, or 0.73 percent, to 3,248.92.

The markets, which were closed last week for the Lunar New Year holiday, dropped even as the People's Bank of China (PBOC) promised to inject 1.2T yuan ($173.8B) worth of liquidity via reverse repo operations into the financial system to calm investors.

The Shanghai Composite index fell 7.7%, slicing $420 billion in value from the benchmark, and the yuan opened at its weakest level this year, sliding past 7 per dollar. But the move had been largely expected because Chinese markets closed just as the outbreak was beginning to draw widespread attention.

The Institute for Supply Management (ISM) said its index of USA factory activity increased to 50.9 last month, the highest level since July, from an upwardly revised 47.8 in December.

Meanwhile, traders will also be watching the results of the Iowa Caucuses, as the 2020 Democratic presidential race kicks off.

China's stocks slumped again on Tuesday, though other Asian benchmarks held up and US futures advanced as investors weigh efforts to contain the coronavirus.

Coronavirus: China builds hospital in 10 days
But estimates by the University of Hong Kong suggest the total number of cases could be far higher than the official figures. The US on Sunday began restricting travel on foreign nationals who were in China in the 14 days prior to arriving in the US.

The Iowa caucuses are Monday, the first contest to choose a Democratic nominee to run against Donald Trump in November.Tuesday brings a policy decision from the Reserve Bank of Australia, and the Reserve Bank of India's interest rate decision is due Thursday.Friday has the US employment report for January. Readings above 50 indicate activity is expanding across the manufacturing sector, while those below 50 signal contraction.

Chinese equities and global commodities remain the worst affected by the epidemic that continues to spread and throttle demand in the world's second-largest economy.

In corporate news, Tesla shares jumped 16% after analysts at Argus Research and ARK Invest raised their price targets for the electric-car maker.

Gilead Sciences Inc shares gained 5.6% after the drugmaker said it has provided its experimental Ebola therapy for use in a small number of patients with the coronavirus.

The Japanese yen weakened 0.2 per cent to 108.51 per dollar.

The U.K. formally exited the EU Friday and entered into a transition period. "We don't have the all-clear yet", Lerner said. "Today, the European Union and the United Kingdom are setting out their stalls". The Stoxx Europe 600 Index swung between gains and losses, as support measures from China's government helped stem losses in other markets. France's Ingenico Group rallied 17% after its board agreed to a cash-and-stock merger with payment-services giant Worldline in a deal that will give Ingenico shareholders 35% of the combined business.

-Steven Russolillo, Xie Yu and Caitlin Ostroff contributed to this article.

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