Asia Stocks Set for Further Losses on Virus Fears: Markets Wrap

(Bloomberg) — Asian stocks looked set for further losses Tuesday as concern over the economic and human impact of China’s deadly coronavirus rattled global markets. Treasuries rallied and the yen held gains.

Futures pointed lower in Japan and Australia, which reopens alongside South Korea after a holiday Monday. Chinese and Hong Kong markets remain closed. The S&P 500 Index fell the most in almost four months with chipmakers, cruise lines and casino operators among the hardest hit as investors fled companies with close links to China. A gauge of U.S. equity volatility surged above its one-year average. The sank, breaching key technical levels.

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Investor concern that China has failed to contain the pneumonia-like virus — which has killed at least 80 people and infected more than 2,700 — roiled markets at the start of a week jam-packed with corporate earnings. The outbreak shattered a calm in markets that hasn’t seen a 1% up-or-down move in the S&P 500 since early October.

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“This is now a sell first, ask questions later situation,” said Alec Young, managing director of global markets research at Russell. “Markets hate uncertainty, and the coronavirus is the ultimate uncertainty — no one knows how badly it will impact the global economy. China is the biggest driver of global growth, so this couldn’t have started in a worse place.”

China’s financial markets will remain closed until next Monday after authorities extended the Lunar New Year break by three days as they grapple with the virus crisis.

Elsewhere, oil slipped to a more than three-month low, had its longest slump since 2014 and iron ore tumbled.

Rare Inversion Points to Potential End of U.S. Equity Rout

Here are some events to watch out for this week:

• Tech giants Apple (NASDAQ:), SAP, Facebook (NASDAQ:), Samsung (KS:) and South Korean chip maker SK Hynix announce earnings, as do Boeing (NYSE:), International Paper, GE, United Technologies (NYSE:), Lockheed Martin (NYSE:), Caterpillar (NYSE:), Unilever (LON:), Exxon Mobil (NYSE:), Shell (LON:) and Chevron (NYSE:).
• Fed policy makers are expected to open 2020 the same way they closed 2019 — by holding interest rates steady Wednesday.
• Goldman Sachs (NYSE:) will hold its first-ever Investor Day on Wednesday.
• The BOE meeting is highly anticipated Thursday after a series of dovish comments raised speculation policy makers could lower interest rates.
• The U.S. reports fourth-quarter GDP Thursday.
• The U.K. is scheduled to leave the European Union Friday.

These are some of the main moves in markets:

Stocks

• fell 0.9%.
• S&P/ASX 200 futures fell 1.3%.
• The S&P 500 slid 1.6%.
• The Index sank 2.3%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%.
• The euro was little changed at $1.102.
• The Japanese yen rose 0.4% to 108.90 per dollar.
• The offshore yuan fell 0.8% to 6.9855 per dollar.

Bonds

• The yield on 10-year Treasuries slid eight basis points to 1.61%.
• Germany’s 10-year yield dipped five basis points to -0.39%.

Commodities

• West Texas Intermediate crude fell 2.6% to $52.77 a barrel.
• Gold rose 0.7% to $1,582 an ounce.

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