SYDNEY- Asian shares stumbled, oil skidded and commodities on Chinese exchanges plunged on their first trading day after a long break on fears the coronavirus epidemic will hit demand in the world’s second-largest economy
Aiming to head off any panic, the Chinese government took a range of steps to shore up an economy hit by travel curbs and business shut-downs because of the epidemic, including cutting its key interest rate.
Despite the measures, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 percent, on track for its eighth straight day of losses.
Chinese shares slumped at the open with the blue-chip index down about 7 percent.
Japan’s Nikkei stumbled 0.9 percent while Australia’s benchmark index skidded 1.2 percent, while New Zealand shares dropped 1.5 percent.
“Until the rate of new cases peaks, equities are in limbo — too late to sell, too early to buy,” said Sean Darby, Hong Kong-based strategist at Jefferies.
A total of 361 people have died in China from the coronavirus with the first death out of the mainland reported on Sunday in the Philippines.
In a bid to cushion the impact on China’s economy, the country’s central bank cut reverse repo rates by 10 basis points and injected 1.2 trillion yuan ($173.8 billion) of liquidity into the markets on Monday.
Beijing also said it would help firms that produce vital goods resume work as soon as possible, state broadcaster CCTV reported.
Still, analysts expect Chinese onshore equity markets to remain under pressure as the number of infections is still likely to increase in the weeks ahead.
Economists at Citigroup said the steps taken by Chinese authorities were “unlikely to be sufficient to curtail a sharp downturn in Q1.”
“As most employees won’t return to work until Feb. 9, the output losses are likely to be larger than expected, and incoming economic activity data will continue to prompt the authorities to take more actions in order to reduce the adverse impact of the Wuhan coronavirus on the economy,” they noted. – Reuters
