Japan Stocks Slide 4% as Fear Spreads; Bonds Rise: Markets Wrap

(Bloomberg) — Fear gripped Asian markets Friday after the biggest rout for equities on Wall Street since 2011, with investors flocking to the yen and bonds to find shelter from the expected blow to corporate earnings from the coronavirus.

With the likes of Citigroup Inc. analysts saying they want to see markets “closer to panic” before going all-in on global equities, there was no appetite for dip buying ahead of the weekend. The Topix Index slid over 4%, and Shanghai and Seoul saw declines of over 3%. U.S. futures tumbled after a 4.4% plunge Thursday. Crude oil collapsed below $46 a barrel. U.S. and Australian 10-year yields were at or near record lows.

Global shares are on course for the worst week since the 2008 crisis, down more than 10% from this month’s peak. That’s after California said it’s monitoring 8,400 people for signs of the virus after they had traveled to Asia, confirmed cases in South Korea topped 2,000 and Japan began shutting down schools.

“Even though the market is pricing in the fear of economic issues and disease hitting the U.S., we haven’t actually seen the emergence of clusters” of virus affected people in the U.S., Steve Englander, global head of foreign exchange research at Standard Chartered told Bloomberg TV. “Once that happens we will see another sell-off.”

Downgrades to expectations for global growth keep rolling in and money markets now see three Federal Reserve interest-rate cuts this year. Bank of America predicted that the global economy will see its weakest year since the financial crisis as the virus damages demand in China and beyond.

These are the main moves in markets:

Stocks

Japan’s Topix index lost 4% as of 12:41 p.m. in Tokyo.The S&P 500 Index lost 4.4% on Thursday. Futures were down 0.7%.Hong Kong’s Hang Seng index slid 2.7%.The Shanghai Composite retreated 3.4%.South Korea’s Kospi index fell 3%.Australia’s S&P/ASX 200 Index declined 3.4%.

Currencies

The yen rose 0.6% to 108.95 per dollar.The offshore yuan dipped 0.1% to 7.0183 per dollar.The euro was at $1.0992, down 0.1%.

Bonds

The yield on 10-year Treasuries was at 1.25%.Australia’s 10-year yield slipped to 0.84%.

Commodities

West Texas Intermediate crude declined 2.7% to $45.85 a barrel.Gold held at $1,644 an ounce.

–With assistance from Jonathan Ferro.

To contact the reporter on this story: Adam Haigh in Sydney at [email protected]

To contact the editors responsible for this story: Christopher Anstey at [email protected], Ravil Shirodkar

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