Shares struggle for footing after virus-battered week

Investors clutch at hopes China can contain coronavirus

Reuters January 31, 2020
Investors clutch at hopes China can contain coronavirus. PHOTO: REUTERS

LONDON: World share markets fought to regain their footing on Friday as investors clutched at hopes that China could contain the coronavirus; even as headlines spoke of more cases and deaths, travel bans, evacuations, and factory shutdowns.

Europe opened 0.3% higher following a bounce in Tokyo but did little to repair what has been the most turbulent and costly week for many markets since August.

The World Health Organization (WHO) on Thursday labelled the virus a global emergency. WHO Director-General Tedros Adhanom Ghebreyesus said that the greatest worry was the potential for the virus to infect countries with weaker health systems, though his praise for China's response seemed to steady markets.

MSCI's broadest index of the world shares got back to flat. Asia-Pacific shares outside Japan extended their fall, however, dropping 0.4%, and appeared set for their worst weekly loss in a year, of 4.6%.

Thursday's 2.3% dive was the sharpest one-day loss in six months. Japan's Nikkei bounced 1% but was off 2.6% for the week.

Hong Kong's Hang Seng drifted 0.3% lower and has shed 9% in two weeks. Korea's Kospi had its worst week in 15 months, losing 5.6%.

"The coronavirus is outweighing everything else," said Francesca Fornasari, head of currency solutions at Insight Investments.

"We have seen quite a position unwind and ... whatever is coming out in terms of data is for the period when the virus hadn't become quite such a big issue."

Meanwhile, Wall Street's S&P 500 futures turned red again in Europe, having rebounded as much 0.5% overnight.

It had been supported by surveys showing Chinese manufacturing activity came in much as expected in January while services firmed, though this was likely before the virus took full hold.

Indeed, reports that some Chinese provinces were asking companies not to re-start until Feb 10 after the New Year holiday suggested activity would take a hard knock this month.

Still, the flow of news on the virus remained bleak with China's Hubei province reporting deaths from the disease had risen by 42 to 204 as of the end of Jan 30.

More airlines curtailed flights into and out of China and companies temporarily closed operations, while Washington told citizens not to travel to any part of China.

Spot gold was only just up for the week at $1,573.72 per ounce, having failed to get much of a safe-haven bid as a range of other commodities, from copper to soybeans, were hammered by worries over Chinese demand.



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