Japan Market extends losses on COVID-19 pandemic fears

The Japan share market declined on Wednesday, 26 February 2020, as investors fled riskier assets on following weak leads from U.S. and European shares overnight, amid intense fears about a slowdown in global growth caused by the deadly coronavirus (COVID-19) and public officials warned of the increasing likelihood of a global pandemic. All industry categories of Topix index lost ground, with Mining, Air Transportation, Real Estate, Services, and Oil & Coal Products issues being notable losers. Around late afternoon, the 225-issue Nikkei Stock Average declined 187.16 points, or 0.83%, to 22,418.25, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange sank 12.59 points, or 0.78%, at 1,605.67.

Investors fled riskier assets amid intense fears about a slowdown in global growth caused by the deadly coronavirus. The spreading deadly virus, that has infected more than 80,000 and killed more than 2,700, has sent shock waves through the markets. There has been a recent spike in coronavirus cases outside of China, where the disease was first reported. South Korean authorities have confirmed more than 900 cases within the country's borders. Meanwhile, Italy has been the worst affected country outside of Asia, with more than 200 reported cases. Iran also confirmed at least 12 deaths.

 

The World Health Organization says the epidemic has peaked in China, but concern that its spread is accelerating in other countries is likely to keep investors on edge.

Adding to recent fears was an alert from the US Centers for Disease Control and Prevention on Tuesday warning Americans to prepare for the spread of coronavirus in the United States, signalling a change in tone for the Atlanta-based US health agency. This follows news on Monday about a spike in cases in other countries in Asia, the Middle East and Europe, outside the virus's epicenter in China. Investors are closely watching reports in Italy, Iran and South Korea.

Some investors had been betting that central banks like the U.S. Federal Reserve would counter any economic weakness resulting from the virus with support such as interest rate cuts. But worries about supply chain disruption curbed this confidence.

CURRENCY & COMMODITY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, appreciated against a basket of currencies, amid growing concerns about the spread of the pneumonia-causing virus. The Japanese yen traded at 110.31 per dollar after strengthening from levels above 110.72 yesterday.

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