Asian stocks rebound though coronavirus fears linger; ST up 0.7%

In a photo from Jan 16, 2020, investors look at screens showing stock information at a brokerage house in Shanghai.
In a photo from Jan 16, 2020, investors look at screens showing stock information at a brokerage house in Shanghai.PHOTO: REUTERS

SYDNEY (BLOOMBERG, REUTERS) - Asian markets and US futures advanced on Tuesday (Feb 11) as investors looked past the potential economic impact of the spreading coronavirus to push a gauge of global stocks close to reclaiming a record high.

Benchmarks in Hong Kong, Seoul and Sydney rose, with Chinese stocks logging their sixth day of gains. Japanese financial markets are shut for a holiday. The risk appetite began in the US where the S&P 500 Index climbed to a new high Monday, with most sectors advancing. 

Hong Kong’s Hang Seng Index rose 1.2 per cent as of 11:25am local time, while the Shanghai Composite Index gained 0.4 per cent.

Australia's S&P/ASX 200 Index advanced 0.5 per cent while South Korea’s Kospi index surged 1.2 per cent.

In Singapore, the Straits Times Index ended the morning session up up 23.56 points or  0.7 per cent to 3,186.71.

S&P 500 futures rose 0.3 per cent. 

Investors are trying to figure out whether the rate of contagion from the coronavirus is stabilizing even as the death toll climbed above 1,000, higher than the Sars outbreak, and one estimate put the mortality rate from the disease at 1 per cent.

Attention is turning to corporate earnings, with investors seeking guidance from companies on the expected impact of the virus on their operations. Earnings are due this week from companies such as Alibaba Group Holding., Credit Suisse Group and Nestle.

 
 
 
 

The risks are such that investors are wagering on more stimulus from Beijing, while a host of other central banks are under pressure to safeguard their economies with cheaper loans.

Markets are pricing in more than 40 basis points of easing this year from the Federal Reserve and again nudged the Treasury yield curve negative, to reflect the danger of recession.

Fed chair Jerome Powell appears before Congress on Tuesday in the first of a two-day testimony and is expected to reiterate that the US economy is doing well but rates can stay low given subdued inflation.

The relative outperformance of the US economy is keeping the US dollar well supported, with the euro slipping to a four-month low at US$1.0906. The British pound touched a two-month trough of US$1.2870 and was last at US$1.2913.

Against a basket of currencies, the dollar was again at its highest since mid-October at 98.858.

The dollar was steadier on the Japanese yen, which benefits from being a safe haven of its own, and last stood at 109.86 .

 Oil recovered some of its losses after plumbing the lowest in more than a year in New York. West Texas Intermediate crude rose 1.2 per cent to US$50.14 a barrel.

Risk aversion helped lift gold to its highest for a week, though the strength of the dollar made for a slow climb. It was last at US$1,571.58 per ounce.