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Jump in new coronavirus cases stymies stock rally

Stock MarketsFeb 13, 2020 01:46AM ET
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By Tom Westbrook

SINGAPORE (Reuters) - Asia's share market rally paused on Thursday, bonds rose and trade-exposed currencies fell as a sharp rise in new coronavirus deaths and infections dented hopes that its spread was slowing.

China's Hubei province, where the virus is believed to have originated, reported 242 new deaths, double the previous day's toll, and confirmed 14,840 new cases on Feb. 12.

The rise in the number of Hubei cases, which came as officials adopted a new methodology for counting infections, is a ninefold increase from a day earlier.

E-mini S&P 500 futures (ESc1) were down 0.4% by the afternoon, pointing to a fade in Wall Street's strong rally, while Futures for the EUROSTOXX 50 were 0.1 weaker.

Ten-year U.S. Treasuries fell below 1.6% (US10YT=RR), the yen strengthened past 110 per dollar and a rally in oil prices halted.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) snapped two days of 1% gains to sit 0.2% lower as most markets across the region posted modest declines.

"There is no panic on this," said Frank Benzimra, head of Asia equity strategy at Societe Generale (PA:SOGN) in Hong Kong, since the dramatic rise seems so far to be contained to Hubei.

The new methodology effectively lowers the bar for classifying new infections, contributing to the spike in cases. It relies on computerized tomography scans to find signs of the virus, rather than waiting for slower ribonucleic acid tests for confirmation. Chinese officials said the method is only being used in Hubei.

Despite that context, the dent to sentiment was enough to present a selling opportunity after several days of gains.

The virus has also cast a shadow over life in Asia's financial markets, with Benzimra himself logged in from home and speaking to clients by phone as meetings are increasingly canceled, even in cities not subject to quarantine.

"Most markets were recouping their losses so that has offered maybe some excuse to sell Asian markets," he said. "But there is not much energy in this."

Japan's Nikkei (N225) fell 0.1%. Australia's ASX/S&P 200 index (AXJO) retreated from a record high. The Shanghai Composite (SSEC) fell 0.5% and Hong Kong's Hang Seng (HSI) was 0.3% softer. Gold rose 0.6% to $1574.86 per ounce.

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On Tuesday, markets had taken comfort from the World Health Organisation's (WHO) emergency program head describing the apparent slowdown in the epidemic's spread as "very reassuring."

Yet WHO chief Tedros Adhanom Ghebreyesus had also warned that it should be viewed with extreme caution. "This outbreak could still go in any direction," he said.

More than 1,300 people have died from the epidemic in China and the total number of cases in Hubei province now stands at 48,206.

Even before the rise in cases, economists were turning more bearish on the likely hit to China's growth as factories idle and supply chains are upended.

Citi on Wednesday again downgraded its 2020 GDP forecast for China to 5.3%. The bank had forecast it to be 5.8% in its January outlook, before cutting it to 5.5% two weeks ago.

Morgan Stanley (NYSE:MS) believes a gradual, rather than sharp recovery is the most likely scenario. That all bodes ill for regional economies and has weighed on Asian currencies and commodities.

The Australian dollar , a liquid proxy for China's economic health because of Australia's export exposure, retraced its recent rally and traded 0.3% softer at $0.6716.

China's yuan was 0.1% weaker .

Rallying oil prices paused, with Brent crude (LCOc1) flat at$55.72 per barrel, 15% below where it was before the coronavirus outbreak.

Jump in new coronavirus cases stymies stock rally
 

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Comments (18)
Silverbug 19
Silverbug 19 Feb 13, 2020 6:52AM ET
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Yesterdays explanation from Reuters market rising cause CV was subdued.
Chris Vu
Chris Vu Feb 13, 2020 6:26AM ET
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China doesn't know what the truth is. In their authoritarian coutry everything is controlled. Maybe this pandemic would be the catalyst for change. I hop e all the high echelon officials are replaced.
Silverbug 19
Silverbug 19 Feb 13, 2020 6:26AM ET
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change from the biggest economy, 300 mph trains, have your ever been to Shanghai.
Space Lord
Space Lord Feb 13, 2020 5:36AM ET
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The news is fake? You fake mr bull!
Stacy Starner
Stacy Starner Feb 13, 2020 3:46AM ET
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Dirty asses always something diseseased infested country. Trump needs to nuild a wall around oit pcean countries
Marcelo Leslie
Marcelo Leslie Feb 13, 2020 2:55AM ET
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This thing is so bad that china has no option but starting to come clean... they cant hide this any longer, obviously they fear the world will ask for their heads on a stick....
Dave Jones
Dave Jones Feb 13, 2020 1:58AM ET
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written like a true propagandist shill...could be straight out of 1984
Tong Luo
Tong Luo Feb 13, 2020 1:39AM ET
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can't him write that is not the real increasing it just count the clinical diagnosed cases before
Max German
MaxiGE Feb 13, 2020 1:11AM ET
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market rallies 3% on virus optimisn that cases going down and with the reality its still going up
Space Lord
Space Lord Feb 12, 2020 11:48PM ET
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Black monday coming. Can't you see the signs, can't you see them?
Fred Smith
Fred Smith Feb 12, 2020 10:00PM ET
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Some guy named Tom westbroke has Coronavirus
rob finch
rob finch Feb 12, 2020 9:56PM ET
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the market makers are going to have to find a new big bad wolf. the kungflu is losing its kick.
Labu Labu
Labu Labu Feb 12, 2020 9:45PM ET
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We are tracking the meaningless number here, CCP faked the number at first, then it tuned the faked number.
Gregory Campbell
Gregory Campbell Feb 12, 2020 8:55PM ET
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sharp rise in the number of people with colds
Philippe Ball
Philippe Ball Feb 12, 2020 8:54PM ET
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Fake news? Covid 19 is transmissable while patients are asymptomatic, thus early diagnostic tests have low predictive value. If a highly developped country with excellent healthcare is struggling to keep up, wait till it takes hold in Africa, where only 4 laboratories can even run tests.
Sam Mojtabai
Sam Mojtabai Feb 12, 2020 8:54PM ET
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On the ball bud People arenaive
Dee Mehta
DMFINANCE Feb 12, 2020 8:50PM ET
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Fraud street wanted to sell before the truth came out.. What a shame
chip isbell
Chip Feb 12, 2020 8:48PM ET
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Four hours ago it was getting better.  Oops.
Fabian Gerspacher
Fabian Gerspacher Feb 12, 2020 8:19PM ET
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Clinically diagnosed is still infected and also able to infect others. And since we didn't had that numbers before it's still news worthy
Robert Egan
Robert Egan Feb 12, 2020 8:14PM ET
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fake news. please read the report thoroughly. they added clinically diagnosed patients to the number of new cases.
Lake Lot
Lake Lot Feb 12, 2020 8:14PM ET
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They done sic , they count
Feb 12, 2020 8:14PM ET
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Nice one buddy, not. Zzz
chip isbell
Chip Feb 12, 2020 8:14PM ET
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Then there is the super spreader that struck recently.  12-28 days to know if you got it.
 
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