* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Shares ex-Japan +0.9%, European bourses seen opening up
* Focus on how fast China companies can return to work
* Sentiment supported by late jump on Wall St
* Dollar near 4mth high on euro as US economy outperforms
By Wayne Cole
SYDNEY, Feb 11 (Reuters) - Asian share markets followed Wall
Street higher on Tuesday as China's factories struggled to
re-open after an extended break, though analysts warned
investors might be underestimating how economically damaging the
challenge was likely to be.
The death toll from the coronavirus epidemic in mainland
China climbed past 1,000 on Tuesday, though the number of new
confirmed cases fell. Investors seemed to be hoping for the best and MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.9%, with Shanghai blue chips .CSI300
ahead by 0.8%.
Japan's Nikkei .N225 was closed for a holiday, although
Nikkei futures NKc1 traded 0.8% firmer. Futures for the
EUROSTOXX 50 .STXEc1 rose 0.7% and the FTSE FFIc1 0.5%.
E-Mini futures for the S&P 500 ESc1 added 0.3%, after a
late jump on Monday took Wall Street to record highs. The Dow
.DJI ended up 0.6%, while the S&P 500 .SPX gained 0.73% and
the Nasdaq .IXIC 1.13%. .N
The gains came even as the World Health Organization (WHO)
warned the spread of the virus among people who had not been to
China could be "the spark that becomes a bigger fire".
In China, factories were slow in reopening after an extended
Lunar New Year break, leading analysts at JPMorgan to again
downgrade forecasts for growth this quarter.
"The coronavirus outbreak completely changed the dynamics of
the Chinese economy," they said in a note.
They assumed the contagion would peak in March and factories
would slowly resume opening this month. In this case, growth
would brake sharply to around a 1% annualised pace in the first
quarter, before rebounding to 9.3% in the second.
Should the contagion not peak until April, the economy could
contract in the first quarter, with a rebound spread over the
second and third quarters, the JPMorgan analysts said.
UNDERESTIMATING THE DAMAGE
Analysts at Nomura said measures of returning workers and
passenger traffic flows within China suggested the virus had "a
devastating impact on China's economy in January and February."
"We are concerned that global markets thus far appear to be
significantly underestimating the extent of disruption inflicted
by the virus," they wrote in a note.
The risks are such that investors are wagering on more
stimulus from Beijing -- even though conventional measures in
such cases can do little to reverse a sharp slump in demand --
while a host of other central banks are under pressure to
safeguard their economies with cheaper loans.
Markets are pricing in almost 40 basis points of easing this
year from the Federal Reserve and again slightly inverted the
Treasury yield curve to reflect the danger of recession. US/
Fed Chair Jerome Powell appears before Congress on Tuesday
to begin two days of testimony and is expected to reiterate that
the U.S. economy is doing well but that rates can stay low given
subdued inflation.
The relative outperformance of the U.S. economy is keeping
the dollar well supported, with the euro slipping to a
four-month low at $1.0906 EUR= . The British pound GBP= was
last at $1.2913 having touched a two-month trough of $1.2870.
Against a basket of currencies, the dollar was again at its
highest since mid-October at 98.858 .DXY .
The dollar was steadier on the Japanese yen, which benefits
from being a safe haven of its own, and last stood at 109.81
JPY= . USD/
Risk aversion initially helped lift gold to its highest for
a week, only for the strength of the dollar to pull it back
0.25% to $1,568.61 per ounce XAU= . GOL/
Oil prices bounced a little after weeks of selling, as
traders waited to see how demand in China might fare and whether
OPEC could agree to trim supplies. O/R
Brent crude LCOc1 futures firmed 64 cents to $53.91 a
barrel, while U.S. crude CLc1 rose 50 cents to $50.07.
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