Asian shares continue to feel brunt of coronavirus pandemic
Asian shares started the week with fresh losses as the coronavirus outbreak continues to shut down travel and business in many parts of the world.
Japan’s benchmark dropped almost 4% and other regional markets were mostly lower. Shares in Australia rose after the government promised more recession-fighting stimulus.
US futures fell slightly more than 1% and oil prices were also lower.
Monday’s drop followed a decline of more than 3% on Wall Street on Friday despite hopes that a $2 trillion (£1.6 trillion) relief bill would ease the economic havoc brought by the pandemic.
“Sentiment once again took a turn for the worse going into a week of reckoning by means of economic fundamentals,” Jingyi Pan of IG said in a commentary.
“The rally seen for Wall Street last week may amount to little more but a relief rally with sentiment turning sour once again going into a fresh week.”
The S&P 500 still gained 10.3% last week, its biggest weekly win since 2009.
The Dow Jones Industrial Average’s 12.8% weekly gain was its biggest since 1938. But the market is still down 25% from the peak it reached a month ago.
Early Monday, Tokyo’s Nikkei 225 dropped 3.7% to 18,680.72 and the Kospi in South Korea lost 2.3% to 1,678.51.
The Shanghai Composite shed 1.6% to 2,728.65, while the Hang Seng in Hong Kong lost 1.8% to 23,070.19.
Australia’s S&P/ASX 200 added 2.3% to 4,955.70 as the government prepared to announce fresh economic support measures for businesses.
The push to deliver financial relief has gained urgency as the outbreak widens.
However the damage to corporate profits, the ultimate driver of stock prices, remains uncertain.
Very few companies have dared to issue forecasts capturing the damage, though traders are girding for discouraging results in the next few weeks as earnings reporting season begins.
Many companies have simply withdrawn their profit forecasts altogether.
At the start of this year, analysts expected S&P 500 companies’ earnings would grow 4.4% in the January-March quarter.
They now expect earnings will be down 4.1%, according to FactSet.
Earnings for airlines, which have been hit by lost bookings as businesses and individuals cancelled travel plans to minimise their risk of contracting the virus, are expected to be catastrophic. Delta went from an expected 2.2% decline to a 108% plunge.
تعليقات
إرسال تعليق