Japan Nikkei dives into bear terrain

The Japan share market extended losses on Thursday, 12 March 2020, with major indexes at three-year lows, as investors continued risk-off selloff after the World Health Organization classified the coronavirus outbreak as a pandemic and President Donald Trump announcement of travel ban from Europe to the United States for 30 days. Meanwhile, yen's appreciation to the mid-103 level against greenback was also a factor behind the selloffs. All 33 industry categories of Topix index declined, with sea transport, air transport and mining issues being notable losers. At closing bell, the 225-issue Nikkei Stock Average stumbled 856.43 points, or 4.41%, to 18,559.63, its lowest closing level since April 2017 and dragged the index into bear market territory - 23% off its Jan. 17 peak. The broader Topix index of all First Section issues on the Tokyo Stock Exchange sank 57.24 points, or 4.13%, at 1,327.88.

The World Health Organization described the new coronavirus as a pandemic for the first time on Wednesday, adding that Italy and Iran were now on the frontline of the disease and other countries would soon join them.

 

U.S. President Donald rump said Washington will suspend most travel from Europe, except from the United Kingdom, to the United States for 30 days starting on Friday. He also announced some other steps, including instructing the Treasury Department to defer tax payments for entities hit by the virus. But investors were hardly convinced those measures will turn around the global economy as concerns grew that the number of infections could quickly snowball in many countries.

The coronavirus outbreak, which originated in China, has cast a shadow over the global economic outlook, prompting investors to flee to the perceived safety of the yen and, in turn, weighing on shares of Japanese exporters, the main engine of the country's economy.

Shares of airlines plunged after Trump announced a 30-day ban on all travel from Europe excluding Britain. Japan's ANA Holdings fell 5.6% and Japan Airlines plummeted 7%.

Heavy selling continued to hit shipping firms, of which Kawasaki Kisen Kaisha dived 12.34% and Nippon Yusen Kabushiki Kaisha 7.94%. JXTG Holdings Inc., Idemitsu Cosmo Energy and other oil stocks kept bleeding on a crude oil market slump.

Financials including megabank group Mitsubishi UFJ Financial Group Inc. and insurer Tokio Marine Holdings Inc. were drove down by fears over falls in interest rates dampening their earnings.

On the economic front, the Bank of Japan said that producer prices in Japan were down 0.4% on month in February, following the 0.2% increase in January.

Japan Business Confidence Deteriorates In Q1 Japan Business Survey Index, or BSI, of larger firms fell to -10.1 in the first quarter from -6.2 in the fourth quarter of 2019, survey data from the Ministry of Finance showed on Thursday. However, sentiment is expected to improve in the second quarter of 2020, with the outlook indicator rising to -4.4. In the manufacturing sector, the BSI of larger firms decreased to -17.2 in the first quarter from -7.8 in the fourth quarter. The outlook index improved to -5.5. Likewise, the BSI of large non-manufacturers dropped to -6.6 in the first quarter from -5.3 in the previous quarter, while the outlook rose to -3.9.

CURRENCY NEWS: The Japanese yen, often seen as a save-haven in times of economic uncertainty, traded at 103.72 following an earlier high of 103.08.

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