Kapadia Mihir Sun Global Investments

Asian Shares Remain Rocky as More Coronavirus Cases are Reported

Wall Street began the slide with technology stocks the biggest victim, this then saw Asia-Pacific shares outside Japan’s Nikkei Index  fell 0.6% while in South Korea, which has reported 52 new cases, stocks fell 1.2%….

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By Mihir Kapadia, the CEO of Sun Global Investments

The Japanese Nikkei supported the nervous sentiment on Friday’s trading by ending flat. Despite the promise of more stimulus policy from China, the confidence looks to have been short lived with many feeling that the coronavirus is too much of a force for markets to deal with.

We could expect the continued rally of the usual safe havens such as gold  bonds and the dollar.

Yesterday US and Global  Equities looked increasingly range bound after selling off from Wednesday’s all-time high levels. DOW -0.44%, S&P -0.38%, NASDAQ -0.67%.

In terms of the main S&P 500 sectors, most were lower with Tech stocks as the major laggards (-1.01%) along with healthcare (-0.62%).

Defensive assets were in favor: Real estate (+1.15%) and utilities  (+0.32%). As noted above, safe-haven assets were in favour, US Treasury Bonds rallied and the yield curve flattened with the 2year – 10 year spread falling back to 11 bp as growth worries have resurfaced.

Gold  and the US dollar both extended their recent rally. In commodities, oil continued to build momentum amid healthy U.S. exports and stockpiles that grew by fewer barrels than expected.

Markets also got a reminder of the economic impact of the virus after South Korean exports to China fell this month and China’s commerce ministry warned that the outbreak will hit the country’s Jan-Feb trade numbers.

In the next few months there will be the release of a lot of economic and corporate data showing the dramatic negative impact of the China shutdown and markets will have to navigate this.”

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