Jump in new coronavirus cases derails stock rally
Asian stock markets wobbled and the safe-havens of the Japanese yen, gold and bonds rose on Thursday as the number of new coronavirus cases at the outbreak’s epicentre jumped sharply.
China’s Hubei province, the epicentre of the virus, reported 242 new deaths and confirmed 14,840 new cases on Feb. 12, a dramatic rise from the 2,015 new cases a day earlier.
The increase came as provincial officials adopted a new methodology for counting infections although it was not immediately clear how the new methods affected the results, nor why the death toll rose so sharply.
The spike dashed hopes that the virus was slowing, knocking U.S. e-mini stock futures in to negative territory, sending the Japanese yen 0.2% higher against the dollar and pushing yields on U.S. 10-year Treasuries about 3 basis points lower.
It also capped gains on stock boards, with MSCI’s broadest index of Asia-Pacific shares outside Japan 0.04% weaker, despite a strong rally on Wall Street overnight.
Japan’s Nikkei was 0.2% lower, while Australia’s ASX/S&P 200 index retreated from a record high.
“The slowdown was the key driver of the rally in growth-exposed assets that we’ve seen over the past 24 hours…a lot of people leapt to the conclusion that we might have seen a peak,” said Michael McCarthy, chief strategist at CMC Markets in Sydney.
“The reversal of what appeared to be good news is enough to have people scrambling for the exits.”
The yen last traded at 109.91 per dollar <JPY=> while export-exposed currencies, which had rallied on confidence the virus could be contained, retraced rises.
The Australian dollar lost 0.2%, as did China’s yuan and the Korean won. Gold rose 0.3% to $ 1570.30 per ounce.
Overnight, World Health Organization chief Tedros Adhanom Ghebreyesus had warned the apparent slowdown in the spread of the epidemic should be viewed with “extreme caution.”
“This outbreak could still go in any direction,” he told a briefing in Geneva.
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.
The economy has also been upended, with factory closures hitting supply chains from car makers to tech firms.
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