GLOBAL MARKETS-Virus uncertainty weighs on global shares, dollar takes breather

GLOBAL MARKETS-Virus uncertainty weighs on global shares, dollar takes breather

Reuters  | Feb 10, 2020 17:08

GLOBAL MARKETS-Virus uncertainty weighs on global shares, dollar takes breather

* Graphic: World FX rates in 2020
* Coronavirus death toll exceeds SARS
* European shares ease on virus uncertainty
* Dollar takes breather after rally last week
* Irish stocks fall after election result

By Ritvik Carvalho
LONDON, Feb 10 (Reuters) - Global shares fell on Monday as
the death toll from a coronavirus outbreak exceeded the SARS
epidemic of two decades ago, though Chinese shares rose as
authorities lifted some work and travel curbs, helping
businesses to resume operations.
The dollar took a breather, trading flat against a basket of
peers after gaining over 1% last week. The greenback gained as a
strong U.S. employment report stood in contrast to both the
expected economic hit to China from the virus and weakness in
the euro zone from weak German industrial numbers in December.
European shares edged lower as fears over the coronavirus'
economic impact still weighed on sentiment. The pan-European
STOXX 600 .STOXX index fell 0.3% in early deals, with the
travel and leisure sector .SXTP the biggest decliner. .EU
Ireland's main index .ISEQ fell as much as 1.2%, dragged
down by banks after Irish nationalists Sinn Fein secured almost
a quarter of first-preference votes in a general election.
MSCI's All Country World Index .MIWD00000PUS , which tracks
shares across 47 countries, was down 0.2%.
Shares in Asia registered a mixed performance.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS reversed some of its early losses but was still
down 0.4%. Japan's Nikkei .N225 was off 0.6%, South Korea's
KOSPI .KS11 was 0.5% weaker while Australia's benchmark index
.AXJO eased a shade.
China's indexes were the only ones in the black in Asia with
the blue-chip index .CSI300 adding 0.5% and Shanghai's SSE
Composite .SSEC up 0.3%.
More than 900 people have so far died mainly in China's
central Hubei province as of Sunday with most of the new deaths
in the provincial capital of Wuhan, the epicentre of the
To contain the spread, China's government had ordered
lockdowns, cancelled flights and shut schools in many cities.
But on Monday, workers began trickling back to offices and
factories though a large number of workplaces remain closed and
many white-collar workers will continue to work from home.
"Despite the ongoing uncertainty, we continue to filter out
the short-term noise and remain overweight emerging market
equities," said Mark Haefele, chief investment officer at UBS
Global Wealth Management in a note to clients.
"While we continue to monitor the risks to our position, we
are optimistic that the decisive actions taken by governments
will bring the outbreak under control."
The outbreak has killed more people than the SARS epidemic
did globally in 2002/2003. The virus has also spread to at least
27 countries and territories, infecting more than 330 people
Over the weekend, an American hospitalised in the central
city of Wuhan became the first confirmed non-Chinese victim of
the virus. A Japanese man who also died there was another
suspected victim.
Monday's losses in Asia extended from Wall Street on Friday
where the Dow .DJI fell 0.9%, the S&P 500 .SPX declined 0.5%
while the Nasdaq .IXIC lost 0.5%.
U.S. stock futures were positive on Monday, however.
Stock markets have recovered some ground since the initial
news of the outbreak impacted markets, as the rate of increase
of reported cases appears to slow.
"Whether the coronavirus-related relief is lasting depends
on whether this epidemic can ultimately be contained. The new
global infections numbers hint at some stabilization suggesting
that the speed of the spreading of this virus has come down,"
said Martin Wolburg, senior economist at Generali Investments in
a note to clients.
"The data imply that the spreading of the epidemic could
stall by the end of February. Therefore, we view last week's
equity market improvement as backed by fundamentals and continue
to see the epidemic as a buying opportunity."
Also helping markets has been stimulus from China's central
bank, which has taken a raft of measures to support the economy,
including reducing interest rates and flushing the market with
liquidity. From Monday, it will provide special funds for banks
to re-lend to businesses working to combat the virus.
Despite the measures, analysts expect the world economy to
take a hit from an expected slowdown in China.
"For now, our best guess is that the economic disruption
related to the coronavirus will cost the world economy over $280
billion in the first quarter of this year," Capital Economics
said in a note on Friday.
"If we're right, then this will mean that global (economic
output) will not grow in q/q terms for the first time since
Elsewhere, in currencies, the euro EUR= staged a
half-hearted bounce from four-month lows to be last at $1.0950.
In commodities, Brent crude LCOc1 futures eased 0.5% to
$54.22 a barrel while U.S. crude CLc1 futures fell 0.7% to
$49.97 a barrel.
Since Jan. 17, oil prices have fallen by 14% while copper is
down around 10%.
Spot gold gained 0.3% to trade at $1,574 an ounce. XAU=

Stocks stabilize as pace of reported virus infections slows

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