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GLOBAL MARKETS-Asian stocks slip as virus' regional spread spooks investors

Published 02/20/2020, 02:51 PM
Updated 02/20/2020, 02:56 PM
© Reuters.  GLOBAL MARKETS-Asian stocks slip as virus' regional spread spooks investors

© Reuters. GLOBAL MARKETS-Asian stocks slip as virus' regional spread spooks investors

* China rate cut done, market focus returns to virus spread
* Climbing cases in S.Korea and Japan drive stocks lower
* Asian currencies sold vs USD
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook
SINGAPORE, Feb 20 (Reuters) - Asian stocks slipped and so
did the region's currencies on Thursday, as virus cases rose in
South Korea and Japan and investors quit local assets in favour
of safety further afield.
China has reported a large drop in new cases and announced
an expected interest rate cut to buttress its economy.
But that came together with a jump in infections in South
Korea, two deaths in Japan and researchers finding that the
pathogen spreads more easily than previously believed.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS slipped 0.3%, led by drops on Hong Kong's Hang
Seng .HSI and South Korea's KOSPI .KS11 .
E-mini futures for the S&P 500 ESc1 traded a fraction
softer and European futures STXEc1 fell 0.2%, while bonds
US10YT=RR firmed slightly.
Currencies from the Australian dollar to the Indian rupee
were under pressure as concerns about the impact of the
coronavirus drove money to the dollar. FRX/
"Markets have taken a step back because the authorities
won't do any major stimulus until they are completely sure the
virus has stopped" said Sean Darby, global equity strategist at
Jefferies in Hong Kong.
"There's no point in doing it when people are sitting at
home. They can't even spend the money or use it."
That kept the effect of China's widely-anticipated interest
rate cut mostly confined to the mainland, where the Shanghai
Composite index .SSEC rose 1.2%. Japan's Nikkei .N225 was also in positive territory thanks
to an overnight slide in the currency - a boon for exporters -
but gains were pared as more cases of infections outside China
hurt sentiment. .T
Two passengers from a coronavirus-hit cruise ship moored
near Tokyo have died, Japan's government said on Thursday,
bringing the death toll outside China to 10. More than 620 of
3,700 passengers have been infected on the ship.
South Korea's government reported 31 new cases of
coronavirus on Thursday, after a new outbreak was traced to a
church, bringing the number of people infected in the country to
82.
More than 2,100 people have died from the coronavirus in
China and there are 74,500 cases there.

FX SELLDOWN
Currency markets were still reeling from an overnight plunge
in the Japanese yen, which fell even as safe-haven assets such
as gold climbed. The yen had been undermined by a run of weak data this week,
but traders were unnerved when it blew past a support level at
110.30 per dollar, accelerating its fall and questioning its
safe-haven status.
It dropped nearly 1.4% against the dollar JPY= , its
sharpest fall in six months, and 2% against the Norwegian krone
- its sharpest daily drop in almost three years NOKJPY=R .
"Nearness to China and dependence on China have not helped
the yen as a risk-off. We have seen the yen and gold diverging
for a while and this may not be the end of it," said Shafali
Sachdev, head of FX in Asia at BNP Paribas Wealth Management.
"The kind of classic correlations between U.S. yields and
the yen, those have been kind of breaking down...we need to see
past this virus situation to see whether the yen will regain its
safe-haven status."
The skittish mood had investors dumping regional currencies
in Asia. The Singapore dollar SGD=D3 dropped to an almost
three-year low, the Korean won KRW= weakened past 1,200 to the
dollar.
The Australian dollar AUD=D3 fell 0.6% to an 11-year low
of $0.6633 after a surprise rise in unemployment. AUD/
Elsewhere, oil prices added to overnight gains while gold
loitered around $1,609 per ounce XAU= .
U.S. crude CLc1 last sat 25 cents firmer at $53.54 per
barrel and Brent added 23 cents to $59.35 LCOc1 .

(Editing by Shri Navaratnam and Jacqueline Wong)

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