Stocks drop and dollar rises as inflation, rate fears return

HONG KONG - Equities tumbled Thursday, tracking a sell-off on Wall Street, while the dollar jumped further as surging inflation, interest rate hikes and recession fears returned to the fore.

Traders in Europe were keeping tabs on Westminster a day after Prime Minister Liz Truss's government was plunged into a fresh crisis and facing collapse following the resignation of home secretary Suella Braverman.

That came days after the sacking of finance minister Kwasi Kwarteng and has left Truss's premiership on a knife-edge.

The positive start to the week, helped by forecast-beating earnings and a major UK government policy U-turn, gave way to the downbeat mood that has characterized markets all year as traders contemplated an extended period of uncertainty.

News that UK inflation bounced back above 10 percent in September highlighted the struggle central banks have in bringing prices down, despite lifting borrowing costs in recent months.

That followed a similarly glum reading out of New Zealand earlier in the week and helped push up government bond yields around the world, indicating higher interest rates.

The unease on trading floors, and concerns that prices are showing no sign of easing, also sent investors back into the safety of the dollar, adding more inflationary pressure outside the United States and dragging on stock markets.

"As is often the case, rising US yields and the strong US dollar are the sledgehammers pounding global equities lower," said SPI Asset Management's Stephen Innes. 

After Wall Street's drop, markets across Asia were deep in the red, with selling also fuelled by concerns about the Chinese economy as Covid cases spike in the country and leaders stick to lockdown strategies.

A decision to delay the release of third-quarter growth data this week added to the unease among investors.

Hong Kong led losses, shedding almost three percent at one point, while Tokyo, Sydney, Seoul, Wellington, Taipei, Shanghai, Mumbai and Manila were also in the red.

There was a brief rally in the afternoon sparked by a report that China was considering easing quarantine rules for people coming into the country, though traders were unable to maintain momentum.

London's FTSE 100 fell in the morning. Frankfurt was also down but Paris edged up.

The losses wiped out most of the gains enjoyed at the start of the week, even as positive earnings reports came in from Netflix and top Wall Street banks, with Ellen Hazen of F.L.Putnam Investment Management warning worse could be yet to come.

"As we look at third-quarter results, we think there are going to be more misses than the market is currently expecting," she told Bloomberg Radio.

"If you look at GDP for this year, it keeps getting revised downward and it's really hard for companies to keep growing their earnings in the face of that."

On forex markets the dollar briefly broke to as high as 150.08 yen for the first time since 1990, putting pressure on Japanese authorities who said saying they were keeping a close watch on the market and were ready to step in to support the beleaguered currency.

But analysts warned the yen would continue to slide as long as the Bank of Japan refuses to tighten monetary policy at the same time as the Federal Reserve presses on with its sharp rate hikes.

The pound was also back under pressure, having bounced Monday after Britain's new finance minister Jeremy Hunt reversed virtually all of Truss's debt-fuelled, tax-cutting mini-budget that hammered financial markets.

Sterling was hovering just above $1.12 -- against more than $1.14 Tuesday -- owing to the chaos in Westminster, with many of the prime minister's own party calling for her to stand down, while there is speculation that more members of the cabinet could walk.

Oil prices extended Wednesday's rally that came in reaction to a drop in US petroleum stockpiles, and despite President Joe Biden's decision to release 15 million barrels from US strategic reserves.

The crude was the last batch to be released from the 180 barrels pledged by Biden earlier this year, aimed at bringing costs down.

But Innes added: "Markets will mostly ignore further releases from the Strategic Petroleum Reserves -- prices are elevated because of the medium- and longer-term gap between supply and demand resulting from years of oil industry swoon and the resulting low capital expenditure.

"So, the impact of additional... releases will likely have diminishing returns with (reserves) at a multi-decade low."

Key figures around 0810 GMT 

Tokyo - Nikkei 225: DOWN 0.9 percent at 27,006.96 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 16,280.22 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,035.05 (close)

London - FTSE 100: DOWN 0.2 percent at 6,914.36

Pound/dollar: DOWN at $1.1210 from $1.1219 on Wednesday

Dollar/yen: UP at 149.90 yen from 149.88 yen

Euro/dollar: UP at $0.9794 from $0.9778 

Euro/pound: UP at 87.18 pence from 87.10 pence

West Texas Intermediate: UP 1.5 percent at $86.86 per barrel

Brent North Sea crude: UP 1.2 percent at $93.52 per barrel

New York - Dow: DOWN 0.3 percent at 30,423.81 (close)

Agence France-Presse

Global stocks fall as Euro hits new 20-year low

NEW YORK, United States - Global stocks were down Tuesday as the euro dove to a new two-decade low against the dollar and traders waited nervously for news on the next US interest rate hikes.

The single currency tumbled to $0.9901, but later clawed back losses as the greenback was hit by poor US economic data.

The dollar had strengthened this week against other currencies ahead of a speech Friday by US Federal Reserve chief Jerome Powell, as markets speculate that the central bank will continue tighten its monetary policy.

Higher interest rates boost the American currency as they make dollar-denominated debt more attractive to investors.

But the euro also has been weighed down by a gloomy outlook for the eurozone economy as Russia's war in Ukraine has sent energy prices soaring.

The unit plunged below parity with the dollar Monday on recession fears to plumb the lowest levels since 2002, when it first came into physical circulation.

In the latest blow, S&P Global's closely watched monthly composite purchasing managers' index (PMI) showed that eurozone economic activity fell for the second month in a row in August.

'Investors are bracing' 

Wall Street indices ended mostly lower, with the Dow Jones falling 0.5 percent.

With the Jackson Hole central banking symposium this week, the focus is on what Fed chief Powell says about plans to tackle high prices, with many fearing officials could send the economy into recession.

"I think that investors are bracing for some hawkish commentary from Fed chair Powell this coming week," said Jack Ablin of Cresset Capital.

European equities and Asian markets also slid amid stubborn worries about the Fed's movements.

US natural gas prices meanwhile hit a fresh 14-year high on Tuesday at $10.028.

But across the Atlantic, European natural gas prices fell, although they remain elevated on fears of a halt to Russia's gas deliveries. The Dutch TTF Gas Futures contract stood at 268.45 euros down from Monday.

Gas had spiked to record peaks in March after key producer Russia launched its invasion of neighboring Ukraine.

That has sparked surging domestic energy bills, fueling decades-high inflation that has prompted tighter monetary policy around the world.

Moscow's maneuvers have hit the single currency hard because the bloc relies heavily on imported Russian gas, said Societe Generale analyst Kit Juckes. 

Fears increased after Russia's Gazprom said Friday the Nord Stream pipeline would be closed for maintenance at the end of the month, cutting Europe's crucial gas deliveries.

"The euro's problem is... the threat from continued squeezing of gas supplies and the cost of replacing Russian gas," Juckes said.

Oil prices -- which have fallen for weeks as recession worries hit demand expectations -- rebounded after Saudi Arabia suggested OPEC and other major producers could cut output citing "volatility" in crude markets.

Key figures at around 2030 GMT

New York - Dow: DOWN 0.5 percent at 32,909.59 points (close)

New York - S&P 500: DOWN 0.2 percent at 4,128.73 (close)

New York - Nasdaq: UNCH at 12,381.30 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,652.52 (close)

London - FTSE 100: DOWN 0.6 percent at 7,488.11 (close)

Frankfurt - DAX: DOWN 0.3 percent at 13,194.23 (close)

Paris - CAC 40: DOWN 0.3 percent at 6,362.02 (close)

Tokyo - Nikkei 225: DOWN 1.2 percent at 28,452.75 (close)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 19,503.25 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,276.22 (close)

Euro/dollar: UP at $0.9973 from $0.9943 Monday

Pound/dollar: UP at $1.1835 from $1.1767

Euro/pound DOWN at 84.25 pence from 84.98 pence

Dollar/yen: DOWN at 136.7710 yen from 137.48 yen

West Texas Intermediate: UP 3.7 percent at $93.74 per barrel

Brent North Sea crude: UP 3.9 percent at $100.22

Agence France-Presse

Indian rupee breaches 80 per dollar, hits new record low

MUMBAI - The Indian rupee fell to more than 80 per US dollar for the first time on record Tuesday, as the greenback extended its rally and foreign capital outflows intensified.

The rupee 80.0600 against the greenback soon after trading started, Bloomberg data showed.

High inflation and rising interest rates in the United States coupled with fears of an impending recession in the world's biggest economy have fuelled a broad dollar rally in recent weeks as investors turn increasingly risk-averse.

Tighter US monetary policy has exacerbated outflows from emerging markets such as India, where foreign investors have withdrawn a net $30.8 billion in debt and equity this year.

Data released last week showed US consumer price inflation hit a fresh four-decade high in June, exceeding market forecasts and stoking expectations of another large Federal Reserve rate hike next week.

In a written statement to the Indian parliament on Monday, finance minister Nirmala Sitharaman attributed the rupee's sharp fall to external reasons.

"Global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the major reasons for the weakening of the Indian Rupee against the US dollar," she said.

At the same time, the Indian currency has strengthened against the British pound, the Japanese yen and the euro in 2022 so far, Sitharaman added.

But higher crude prices have resulted in a deteriorating trade balance in a country that imports 80 percent of its oil needs.

India's merchandise trade deficit widened to a record $26.18 billion in June, official data showed last week, largely because of higher crude and coal import prices.

In its monthly economic review, the Ministry of Finance said costlier imports could widen the current account deficit and cause the rupee to depreciate further.

Consumer price inflation in India, the world's sixth-largest economy, cooled off slightly to 7.01 percent in June after hitting an eight-year high of 7.79 percent in April.

But price rises have persisted well above the central bank's two-to-six percent target range despite consecutive interest rate hikes in May and June.

The central bank has also sold more than $34 billion of its foreign currency reserves in an effort to stabilize the rupee.

Agence France-Presse

Dollar shines, euro droops as Omicron spreads while Fed hawks circle

TOKYO - The US dollar hovered near the highest since July of last year against major peers on Monday after a Federal Reserve official signaled a first pandemic-era interest rate hike could come as early as March.

The euro sank with the British pound after the Netherlands went into lockdown on Sunday and Britain's health minister declined to rule out the chance of further restrictions before Christmas amid the rapid spread of the Omicron coronavirus variant.

The dollar index, which measures the currency against six major peers, stood at 96.629, not far from the peak at 96.938 reached last month.

The World Health Organization said on Saturday that the number of Omicron cases is doubling in 1.5 to 3 days in areas of the world with community transmission, but noted that much remains unknown about the variant, including the severity of the illness it causes.

On Friday, Fed Governor Chris Waller said an interest rate increase will likely be warranted "shortly after" the bank ends its bond purchases in March.

"Waller gave the (dollar index) a tailwind on Friday," which is now eyeing a new high, but "positioning is skewed long in USDs, so the prospect of position squaring into year-end is elevated," Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.

"While central bank actions are the real issue, headlines on Omicron could be seen as the smoking gun for position squaring."

The greenback, which tends to attract demand as a safe haven, touched its highest since Dec. 15 against the euro, sterling and the risk-sensitive Australian dollar.

The dollar slipped though against fellow haven currency the yen, but still near the middle of the trading range of the past three weeks.

Ten-year US Treasury yields, to which the dollar-yen pair are often closely correlated, languished near a two-week low reached Friday. 

Earlier on Friday, New York Fed president John Williams told CNBC that the Fed will gain "optionality" to raise rates in 2022 by ending bond purchases by March.

Money markets price about 50-50 odds of a quarter point hike by March.

-reuters-

Bulls back in charge in global markets as omicron worries wane

LONDON - Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds again.

The FTSEurofirst 300 index was on track for its first back-to-back run of plus 1 percent gains since February while Asia saw record bounces from some of China's biggest firms such as Alibaba and Baidu.

The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen,, which had lost 0.6 percent overnight, as the confidence-sensitive Australian dollar also found buyers.

Safe-harbour government bonds went the other way with yields - which move inverse to bond prices - up 2.5 percent on Germany's benchmark 10-year Bund after falling to a three-month low on Monday.

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top US infectious disease official, Anthony Fauci, told CNN "it does not look like there's a great degree of severity" so far.

"Good news relating to the severity of Omicron should be taken with a pinch of salt. Faster transmission could offset the benefits of milder symptoms," researchers at ING said in a note. "More broadly, it is still early days, even if markets are starting to display Omicron fatigue."

The gains also came after China's central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.

There was still uncertainty about its property sector as Evergrande teetered on the brink of default again but data showing much stronger import growth was "a positive sign on the strength of domestic demand", RBC analyst Adam Cole said.

Elsewhere, Australia's S&P/ASX200 rose 0.95 percent, while Japan's Nikkei advanced 2.1 percent as risk-on sentiment pushed markets higher.

MSCI's main Asia ex-Japan benchmark has lost about 5 percent so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks outperformed.

Shares in embattled developer Evergrande edged up 1.7 percent after hitting a record low on Monday as markets waited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.

"While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week's brutal sell-off ought to have been milder," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

"After all, early assessments of Omicron cases have been declared mild, spurring half-full relief."

Also supporting the dollar in FX markets was the expectation the Federal Reserve will accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market.

Oil prices jumped another 2 percent to $74.60 a barrel, adding to a near 5 percent rebound the day before as concerns about the impact of Omicron on global fuel demand eased.

Copper prices also ticked higher while gold was steady at $1,778.5 per ounce on expectations US consumer price data due later this week will show inflation quickening.

(Additional reporting by Anshuman Daga in Singapore; Editing by Nick Macfie)

-reuters-

World shares mixed as investors eye virus counts, stimulus

Shares were mixed in Europe and Asia on Tuesday, after buying of technology stocks nudged the S&P 500 closer to the record high it set in February before the pandemic crunched the global economy.

Britain’s FTSE 100 slipped 0.1% to 6,122.05, while the DAX in Frankfurt lost 0.2% to 12,892.19. In Paris, the CAC 40 lost 0.3% to 4,957.26. The future for the S&P 500 edged 0.1% lower, to 3,376.30. The future for the Dow industrials lost 0.2% to 27,734.00.

Markets were buoyed by developments in Washington, after Speaker Nancy Pelosi called the House back into session, cutting short the lawmakers’ summer recess for a vote expected Saturday on legislation to prohibit changes in the U.S. Postal Service amid growing concerns that the Trump administration is trying to undermine the agency ahead of the November election.

The proposed package will also include $25 billion to shore up the Postal Service, which is suffering losses. But prospects for additional economic aid for American workers and businesses remain uncertain after talks on a fresh stimulus package stalled.

Investors say it’s crucial that the support comes, particularly after $600 in weekly unemployment benefits and other stimulus from the U.S. government expired.

Without more help for the U.S. economy, analysts say the recovery that investors have been assuming is on the way won’t materialize. And that assumption is a huge reason the stock market is as high as it is.

Still, on Monday the S&P 500 picked up 0.3% to 3,381.99. Earlier in the day, it briefly crossed above its record closing level of 3,386.15, which was set on Feb. 19 before the pandemic shut down businesses worldwide and created the worst recession in decades.

“The markets are in ‘show me the money’ mode, perhaps erring on the side of caution, not holding their breath for an imminent deal in Congress,” Stephen Innes of AxiCorp said in a commentary. “Sadly, this leaves the U.S. real economy waddling and many businesses and millions of consumers getting the short shrift.”

In Asia, South Korea’s Kospi led regional losses, slumping 2.5% to 2,348.24 amid worries over surging coronavirus cases.

South Korean health officials said Tuesday they had found 457 coronavirus cases linked to a huge northern Seoul church led by a bitter critic of the country’s president, driving an alarming rise in infections in the greater capital area.

During a virus briefing, Kwon Jun-wook, director of South Korea’s National Health Institute, said the outbreaks could create a situation comparable to the “miserable scenes of the United States or European countries.”

There’s concern that the virus’s spread could worsen after thousand of protesters, including members of the church and its ultra-right pastor, Jun Kwang-hun, marched in downtown Seoul Saturday despite official pleas to stay home.

Elsewhere, Hong Kong’s Hang Seng index lost 0.2% to 25,367.38. Japan’s Nikkei 225 slipped 0.2% to 23,051.08. Australia’s S&P/ASX 200 gained 0.8% to 6,123.40, while the Shanghai Composite index edged 0.4% higher, to 3,451.09.

Treasury yields moderated a bit, following a big rally for the 10-year yield last week. It dipped to 0.67% from 0.71% late Friday. It had zoomed upward from 0.56% through last week.

Higher yields suggest investors are upgrading their expectations for inflation and the economy. But they can also pull some buyers away from stocks into bonds, hurting stock prices.

Benchmark U.S. crude oil was flat at $42.89 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, picked up 6 cents to $45.43.

In currency dealings, the U.S. dollar weakened to 105.58 Japanese yen from 105.98 yen. The euro rose to $1.1890 from $1.1873.

Gold for delivery in December climbed $17.60 cents to $2,016.30 per ounce.

Associated Press

World stocks pull back as virus worries resurface

NEW YORK -- Stock markets eased back on Thursday as worries that the world has not seen the last of the coronavirus pandemic caused investors to take some profits after a recent strong run.

US data showing 1.5 million workers filed for unemployment benefits last week -- only slightly less than the prior week -- added to jitters about the economic outlook.

In Europe, investors were underwhelmed by the Bank of England's latest monetary policy decisions, which undermined the pound and London stocks.

Wall Street finished little changed after a choppy session, as investors weighed weak economic data against optimism over the impact of monetary stimulus.

Art Hogan, chief market strategist at National Securities, described the market as being "in a bit of a stalemate" with worrisome economic and coronavirus trends offset by reassuring support from the Federal Reserve and hopes for coronavirus treatments.

Global markets were still "a bit cautious as uncertainty regarding a second wave of COVID-19 continues to simmer, countering recent economic data that has suggested improvement as economies reopen," said analysts at Charles Schwab.

Earlier, Asian equity indices had closed mixed after a 2-day rally.

The Bank of England on Thursday unveiled an extra £100 billion of cash stimulus to prop up Britain's coronavirus-hit economy, a figure in line with expectations, but analysts said the market had hoped for some forward-looking reassurance.

"BoE watchers could feel a little short-changed," said Kallum Pickering at Berenberg.

"The market had expected a clear signal that the BoE would ease policy significantly further at a later date or that the bank was seriously contemplating further expanding its toolkit in response to the COVID-19 mega-recession," he said.

While countries are slowly reopening their economies -- with flights resuming, bars, cafes and restaurants serving people and professional football returning -- new infections continue to surge in some places and are flaring up again in others.

Eyes are on Beijing, which has imposed new lockdowns, closed schools and banned flights again after the emergence of new clusters.

Meanwhile, hospitalizations have risen in Texas among other US states since Memorial Day, and California on Thursday required face masks in public indoor spaces following a jump in cases.

KEY FIGURES AROUND 2030 GMT (4:30 a.m. Friday in Manila)

New York - Dow: DOWN 0.2 percent at 26,080.10 (close)

New York - S&P 500: UP 0.1 percent at 3,115.34 (close)

New York - Nasdaq: UP 0.3 percent at 9,943.05 (close)

London - FTSE 100: DOWN 0.5 percent at 6,224.07 (close)

Frankfurt - DAX 30: DOWN 0.8 percent at 12,281.53 (close)

Paris - CAC 40: DOWN 0.8 percent at 4,958.75 (close)

EURO STOXX 50: DOWN 0.5 percent at 3,249.90 (close)

Tokyo - Nikkei 225: DOWN 0.5 percent at 22,355.46 (close)

Hong Kong - Hang Seng: DOWN 0.1 percent at 24,464.94 (close)

Shanghai - Composite: UP 0.1 percent at 2,939.32 (close)

West Texas Intermediate: UP 2.3 percent at $38.84 per barrel

Brent North Sea crude: UP 2.0 percent at $41.51 per barrel

Euro/dollar: DOWN at $1.1203 from $1.1244 at 2050 GMT

Dollar/yen: DOWN at 106.99 yen from 107.01

Pound/dollar: DOWN at $1.2422 from $1.2555

Euro/pound: UP at 90.18 from 89.55 pence

Agence France-Presse

Saudi foreign reserves fall at fastest for two decades

RIYADH/DUBAI - Saudi Arabia's central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while the kingdom slipped into a $9 billion budget deficit in the first quarter as oil revenues collapsed.

The world's largest oil exporter is suffering from historic price lows, while at the same time measures to fight the new coronavirus are likely to curb the pace and scale of economic reforms launched by Crown Prince Mohammed bin Salman.

The Saudi Arabian Monetary Authority said late on Tuesday its net foreign assets, which include securities such as U.S Treasuries and foreign deposits, fell in March to $464 billion, their lowest in 19 years.

The nearly $27 billion decline - the biggest monthly drop in at least two decades - signals the kingdom's urgent need to tap into reserves to offset economic damage from oil prices and a severe coronavirus-driven slowdown of non-oil sectors.

"We believe that the magnitude of the drop ... reflected both higher government funding to cover the budget deficit and the support packages announced in March to help counterbalance the impact of COVID-19," said Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB).

Finance Minister Mohammed al-Jadaan said last week the kingdom would limit its drawdown to a maximum of $32 billion from reserves this year to fill a widening deficit which it plans to cover instead by increasing borrowing to nearly $60 billion.

Early on Wednesday, the finance ministry reported a first quarter budget deficit of $9 billion, mostly because of a drop in oil revenues that reversed a first quarter surplus of around $7.4 billion in 2019.

Oil revenues in the first three months of the year posted a 24% annual decline to $34 billion and pushed total revenues down 22% year on year.

Saudi Arabia, which had registered more than 20,000 coronavirus cases as of Tuesday with 152 deaths, had originally projected a $50 billion deficit this year, or 6.4% of gross domestic product (GDP), widening from around $35 billion last year.

Jadaan has said the deficit could now widen to up to 9% of GDP this year, but some analysts have predicted 22% with oil prices at $30 a barrel.

PRICE PLUNGE

International oil prices have shed around two thirds value since the start of this year and are trading around $21.

"If Finance Minister al-Jadaan's plans are for merely $32 billion of reserves drawdown then, following a $27 billion reduction in March alone, that means almost all the remainder will be covered by new sovereign debt issuance, assuming there are no further privatisations, because of market conditions," said Hasnain Malik, head of equity strategy at Tellimer.

Saudi Arabia and other large producers recently agreed to cut output by almost 10 million barrels per day (bpd), in May-June, in an attempt to balance the market, but demand kept falling nonetheless due to the global slowdown.

Jadaan said last week he expects the pandemic to cause a slump in activity in the non-oil private sector too this year and that the government could take more actions on top of $32 billion in emergency stimulus measures announced last month.

Private sector loan growth, however, was solid in March, central bank data showed, "potentially reflecting the higher borrowing requirements of corporates with COVID-19 impacting cash flows," said ADCB's Malik.

Non-oil revenues in the first quarter fell 17% compared to the same period one year earlier, with revenues from taxes on goods and services plunging, in a sign of overall slowdown.

Saudi Arabia has already cut its 2020 budget by nearly 5% and further spending curbs are likely.

In Q1, however, capex spending declined only 4%, the finance ministry said.

Riyadh last month raised its debt ceiling to 50% of GDP from 30%. It has already borrowed $12 billion in international bonds this year.

($1 = 3.7600 riyals) (Reporting By Marwa Rashad and Davide Barbuscia; Additional reporting by Ahmed Tolba; Editing by Himani Sarkar, Shri Navaratnam, Barbara Lewis and Andrew Cawthorne)

-reuters-

Asia equities set to plunge after US crude collapses for second day

WASHINGTON/NEW YORK -- Asian share markets were set to tumble on Wednesday as the floor fell out from under US crude prices, exposing the deep damage the coronavirus pandemic has had on global economic demand.

Skittish investors sought the safety of government debt and even dumped safe-haven gold as Brent oil futures plunged for a second day, fueled by a swelling global crude glut.

Australian S&P/ASX 200 futures lost 2.1 percent in early trading while Japan's Nikkei futures rose 0.21 percent.

The collapse in US crude prices has given fresh urgency to bearish voices who say it sounds alarm bells for global growth and are bracing for a catastrophic collapse in asset prices as the COVID-19 pandemic wrecks the world economy.

Earlier his week, the May US WTI futures contract crashed into negative pricing for the first time in history. In addition to massive oversupply concerns, analysts say the plunge also highlights the technical constraints the market faces in responding to shocks.

"The negative price for May WTI futures was probably an anomaly, but it also was a symptom of bigger underlying issues that the industry must address," said Arij van Berkel, who leads the energy research team at Lux Research in Amsterdam.

"Even though the oil industry theoretically has a diversified product portfolio, the current situation shows that its ability to switch between markets is extremely limited."

The Nikkei 225 index closed down 1.15 percent at 19,669.12​​​ on Tuesday. The futures contract is down 2.64 percent from that close.

Hong Kong's Hang Seng index futures lost 1.31 percent.

On Wall Street, the Dow Jones Industrial Average fell 2.67% to 23,018.88, the S&P 500 lost 3.07% to 2,736.56 and the Nasdaq Composite dropped 3.48% to 8,263.23.

The pan-European STOXX 600 index lost 3.39% and MSCI's gauge of stocks across the globe shed 3.01%.

As the difficulties of restarting the U.S. economy sank in, U.S. Treasury yields tumbled, with the five-year note hitting a new record low on rising prices for bonds: one of the safest assets.

The U.S. dollar rose to a two-week high against a basket of currencies, as investors fled riskier assets for the world's most liquid currency while putting pressure on oil-linked currencies such as the Norwegian crown and the Canadian dollar.

Investors face a worldwide supply glut that is expected to overwhelm demand for months or even years and current production cuts to offset that excess are nowhere near sufficient.

US crude recently rose 124.08 percent to $10.01 per barrel while Brent oil futures prices plunged again on Tuesday to $19.82, down 22.49 percent on the day, as panic extended to a second day.

Both Saudi Arabia and Russia said on Tuesday they were ready to take extra measures to stabilize oil markets along with other producers, but they have not taken action yet.

Investors have become increasingly wary of the economic damage from sweeping lockdowns that have brought US business activity to a halt and sparked millions of layoffs.

Governors of about half a dozen US states, including Georgia and South Carolina, are pushing ahead with plans to begin a partial restart of their economies despite warnings that loosening restrictions prematurely could lead to a fresh surge of infections.

Meanwhile, the US Senate on Tuesday unanimously approved $484 billion in additional coronavirus relief for the US economy and hospitals treating patients sickened by the pandemic, sending the measure to the House of Representatives for final passage later this week.

-reuters-

Asia shares off to cautious start, US crude slides

SYDNEY -- Caution gripped Asian share markets on Monday on expectations a busy week of corporate earnings reports and economic data will drive home the damage done by the global virus lockdown, while US crude prices took an early spill.

Japan reported its exports fell almost 12 percent in March from a year earlier, with shipments to the U S down over 16 percent. Early readings on April manufacturing globally are due on Thursday and are expected to show recession-like readings.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent in slow early trade, with a pause needed after 5 straight weeks of gains. Japan's Nikkei fell 1.3 percent and South Korea 0.1 percent.

E-Mini futures for the S&P 500 slipped 0.7 percent, having jumped last week on hopes some US states would soon start to re-open their economies.

US President Donald Trump said Sunday that Republicans were "close" to getting a deal with Democrats on a support package for small business.

But the US Centers for Disease Control and Prevention reported an increase of 29,916 in new infections and said the number of deaths had risen by 1,759 to 37,202.

The S&P 500 has still rallied 30 percent from its March low, thanks in part to the extreme easing steps taken by the Federal Reserve. The Fed has bought nearly $1.3 trillion of Treasuries alone, and many billions of non-sovereign debt it would historically have never gone near.

"The Fed will be a major buyer of risky assets in the coming months, and has displayed its willingness to backstop virtually any part of the domestic financial system in trouble," said Oliver Jones, a senior markets economist at Capital Economics.

Yet the particular composition of the S&P 500 was also a major factor, he added, as three sectors relatively resilient to a virus-induced lockdown -- IT, communications services and healthcare -- make up around 50 percent of the index.

Indeed, Microsoft, Apple, Amazon, Alphabet and Facebook account for more than a fifth of the index.

"What's more, the S&P 500 is skewed towards a few ultra-large firms, some of which are also in those sectors. Their sheer size might make them better able to weather a few months of dramatically-low revenues than most."

The rebound in the S&P 500 therefore likely overstated optimism on the economy, Jones argued, noting European benchmark equities indices and US small cap indices were still in bear market territory.

Bond markets suggested investors expected tough economic times ahead with yields on US 10-year Treasuries steady at 0.65 percent, from 1.91 percent at the start of the year.

That decline has shrunk the US dollar's yield advantage over its peers and left it rangebound in recent weeks. So far in April, the dollar index has wandered between 98.813 and 100.940 and was last at 99.791.

The dollar was a fraction firmer on the yen on Monday at 107.63 but again well within recent ranges, while the euro idled at $1.0868.

Gold had recoiled to $1,676 per ounce, having touched a 7-1/2 peak of $1,746.50 last week.

Oil prices remained under pressure as the global lockdown saw fuel demand evaporate, leaving so much extra supply countries were finding it hard to find space to store it.

So great was the near-term glut that the May futures contract for US crude was trading down 7 percent at $16.96 a barrel , while June was standing at $24.28.

Brent crude futures have already rolled over into June and that contract was off 32 cents at $27.75 a barrel.

-reuters-

Federal Reserve ramps up help to US economy on life support

WASHINGTON - The Federal Reserve launched an unprecedented effort on Monday to flood the US economy with money amid the chaos caused by the coronavirus pandemic, as Congress debated a rescue plan for American workers and companies.

Like patients around the world battling the disease itself, the US economy is on life support, with some forecasters projecting a 14 percent contraction in the April-June quarter while the global economy could shrink 1.5 percent this year.

About a third of Americans have been ordered to stay at home, and the Fed warned of "severe disruptions" from the virus as it rolled out another series of measures to pump funds into the economy, including buying unlimited amounts of government debt -- a move akin to printing money.

But while that should provide oxygen to the financial system and keep businesses open, lawmakers continued haggling over an emergency aid package, with Democrats in the House unveiling a proposal that would cost a whopping $2.5 trillion as they demanded more funds to help workers directly and more strings on any aid going to corporations.

President Donald Trump signaled his approval of the Fed's move last weeks to slash the benchmark lending rate to zero, saying central bank chair Jerome Powell had "done a really good job," in a reversal of previous criticism over his refusal to lower rates.

The president also praised the strong US dollar but acknowledged it makes "trade much tougher" -- an unusual statement from an American president, who typically don't comment on the currency's value.

Treasury Secretary Steven Mnuchin spent the day meeting with congressional leaders, and played down Democratic concerns about taxpayers coming to the rescue of major corporations. 

"I want to be clear, there are no bailouts," he said on Fox Business Network. "This isn't corporate welfare. This helps all American workers."

EXISTENTIAL THREAT

Mnuchin said the Fed's measures would provide $4 trillion in needed liquidity into the US economy.

The Fed had already announced it would buy at least $500 billion of Treasury debt as well as $200 billion of mortgage-backed debt, but now has committed to buying "in the amounts needed to support smooth market functioning." 

The Fed's New York branch, which handles the financial transactions, said it would start out by purchasing $75 billion per-day in Treasuries and $50 billion per-day in mortgage-backed securities.

In the latest action, the Fed revived facilities it last used during the 2008 global financial crisis, and expanded others announced in recent days, including buying debt issued by US municipalities and by corporations. 

In addition, the Fed said it would soon unveil a program to lend directly to small- and medium-sized companies -- those that have been hardest hit by the near complete shutdown of the US economy as authorities fight to contain the spread of the virus.

"While great uncertainty remains, it has become clear that our economy will face severe disruptions," the Fed said in a statement, pledging to use all available tools to contain the damage.

"Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate."

CONGRESSIONAL INTERVENTION

Economists praised the effort, but said massive stimulus from Congress is still needed.

"The downturn is not avoidable. The economic carnage associated with downturn can be mitigated so that there is an economy left to ramp up," said Diane Swonk, chief economist at Grant Thornton.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, offered an equally dire warning: "The near-term threat to the economy is existential."

The central bank actions represent "an all-out effort to ensure that the business sector can continue to exist even as economic activity temporarily collapses. The Fed is now effectively the direct lender of last resort to the real economy, not just the financial system."

The central bank pledged to "continue to use its full range of tools to support the flow of credit to households and businesses."

One of the programs, the Term Asset-Backed Securities Loan Facility (TALF), will help backstop recent student loans, car loans and credit card debt as well as small business loans.

Agence France-Presse

Asian markets on ropes as S&P500 slides, dollar in demand

SYDNEY -- Asian markets were set for another turbulent week on Monday as more countries all but shut down in the fight against the coronavirus, threatening to overwhelm policymakers' frantic efforts to cushion what is clear to be a deep global recession.

In a taste of what was to come, E-Mini futures for the S&P 500 dived 5 percent right at the start of Asian trading to be limit down. Nikkei futures sank 5.8 percent.

Oil was not far behind as mass bans on travel worldwide crushed demand for fuel. Brent crude futures slid a further $1.90 to $25.01 a barrel in chaotic trade, while US crude shed $1.58 to $21.05.

Analysts fear the collapse in oil and other commodity prices will set off a deflationary wave making it harder for monetary policy easing to gain traction as economies shut down.

Nearly one in three Americans were ordered to stay home on Sunday to slow the spread of the disease, while Italy banned internal travel as deaths there reached 5,476.

US President Donald Trump went on TV to approve disaster deceleration requests from New York and Washington, while St. Louis Federal Reserve President James Bullard warned unemployment could reach 30 percent unless more was done fiscally.

US stocks have already fallen more than 30 percent from their mid-February and even the safest areas of the bond market experiencing liquidity stress as distressed funds are forced to sell good assets to cover positions gone bad.

"It would be a brave, or foolish, man to call the bottom in equities without a dramatic medical breakthrough," said Alan Ruskin, head of G10 FX strategy at Deutsche Bank.

Also needed would be evidence that China can re-emerge from the virus, without reigniting infections and, that other major economies have hit the inflection points for infection rates, he added.

"Even were social distancing to subside at the earliest plausible dates in Europe and the US, it will have done extraordinary damage to confidence in a host of key sectors."

The mounting economic toll led to a major rally in sovereign bonds late last week, with efforts by central banks to restore liquidity in the market allowing for more two-way trade.

Yields on the benchmark US 10-year note dived all the way to 0.84 percent on Friday, having been as high as 1.28 percent, an enormous swing that has become all too common.

Treasury futures extended the bounce on Monday by climbing more than a full point.

In New Zealand, the central bank announced its first outright purchase of government paper aiming to inject much-needed liquidity into the local market.

In currency markets, the first instinct on Monday was to dump those leveraged to global growth and commodity prices, sending the Australian dollar down 1.4 percent to $0.5717.

The US dollar was again buoyed by safe-haven flows and edged up 0.2 percent on the yen to 111.03, while the euro eased 0.3 percent to $1.0662.

Against a basket of currencies the dollar gained 0.4 percent to 102.810.

The steady rise in the dollar undermined gold, which slipped 0.5 percent to $1,490.07 per ounce.

source: news.abs-cbn.com

Asian markets braced for deeper rout as virus panic worsens

SINGAPORE -- Asia's stocks were poised to plunge further on Friday as panic gripped world financial markets and even safe-haven assets such as gold were ditched to cover losses in the wipeout.

S&P 500 futures are down 0.5 percent in Asia. Nikkei futures were 10.88 percent lower in late New York trade. Australia's benchmark lost 7 percent and New Zealand's index was last more than 8 percent, its biggest intraday drop on record.

Currency trading was erratic amid poor liquidity and a rush to secure financing in dollars.

Overnight, Wall Street's Dow industrials index suffered its largest daily decline since the 1987 Black Monday crash.


The plunge, as the coronavirus pandemic spreads, gathered steam after US President Donald Trump spooked investors with a move to restrict travel from Europe, and after the European Central Bank disappointed markets by holding back on rate cuts.

Trade was halted on the S&P 500 after it hit downdraft circuit breakers. It fell further when trade resumed, eventually losing 9.5 percent to close 27 percent below February's peak.

Gold fell 3.5 percent, yields on long-dated US Treasuries rose amid the panic, and in the currency markets, investors stampeded into the dollar.

"Everyone is just de-risking," said Stuart Oakley, Nomura's global head of flow FX in Singapore.

"It's not just a case of the stock market going down, anyone who's long the stock market needs to chop out...it's just a case of people wanting to bring risk back to flat," he said.

In a televised address late on Wednesday, US President Donald Trump imposed restrictions on travel from Europe to the United States, shocking investors and travelers.

Traders were disappointed after hoping to see broader measures to fight the spread of the virus and blunt its expected blow to economic growth.

The New York Federal Reserve pumped more liquidity to banks to try and stabilize the system as markets show signs of stress.

MSCI's gauge of stocks across the globe shed 9.51 percent and was down more than 20 percent from its 52-week peak.

The VIX volatility index - Wall Street's "fear gauge" - and an equivalent measure of volatility for the Euro Stoxx 50 hit their highest since the 2008 financial crisis.

In early Asia currency trade volumes were light and tight liquidity exaggerated moves. The dollar handed back some gains to the yen, pound and franc and Australian dollar lifted about 1 percent from an 11-year low to $0.6287.

The euro found footing at $1.1171 after falling as far as $1.1054 overnight.

source: news.abs-cbn.com

Yen, euro gain on dollar as Fed rate cut talks heat up

TOKYO -- The yen and the euro rose against the dollar on Monday on growing expectations that the US Federal Reserve will cut interest rates at its policy review this month to protect the economy from the rapid spread of the coronavirus.

As US shares were routed in recent days, Federal Reserve Chair Jerome Powell said on Friday the central bank will "act as appropriate" to support the economy in the face of risks posed by the coronavirus epidemic.

Investors took his comments as a hint that the Fed will cut interest rates by at least 0.25 percentage point at its next scheduled meeting on March 17-18.

There is even increasing chatter of an unscheduled move, with a US bank lobby economist saying a coordinated global interest rate cut by the top central banks could happen as early as on Wednesday.

The expectations around the Fed underscored the speed and scale of the virus' spread from China through to dozens of countries and the potentially crippling blow to the global economy.

Investors expect the dollar's yield advantage - a key support for the US currency - to shrink as the European Central Bank and the Bank of Japan are seen having limited room for further cuts given their rates are already in negative territory.

The yen rose to as high as 107 to the dollar in early Monday trade and last stood at 107.75 yen, up 0.3 percent from its levels in New York late on Friday.

The Japanese currency had risen 3.2 percent last week, the biggest gain since July 2016. Japan's current account surplus and the yen's vast liquidity make the yen behave like safe haven asset.

The euro stood at $1.1042, up 0.14 percent so far in Asia, trading near its highest level in almost a month after a 1.7 percent gain last week, the largest in two years.

The common currency's rise stemmed from unwinding of so-called euro carry trade, in which speculators borrow the euro to invest in higher-yielding currencies, market players said.

The safe haven Swiss franc also hit 1-1/2-year high of 0.9610 franc per US dollar on Friday and last stood at 0.9642.

Underscoring investors' concerns, China's official Purchasing Managers' Index (PMI) fell to a record low of 35.7 in February from 50.0 in January, the National Bureau of Statistics said on Saturday, showing factory activity contracted at the fastest pace ever.

"The data showed the severity of the damage from the coronavirus. If upcoming data undershoots market expectations, that will weigh on sentiment further," said Kyosuke Suzuki, director of currency trading at Societe Generale.

The offshore yuan slipped only slightly to 6.9840 yuan per dollar, down about 0.17 percent in early Asian trade, off Friday's high of 6.9777, its highest since Feb. 17.

But the Australian dollar, often used as a liquid proxy on China, lost 0.34 percent to $0.6485, down 0.34 percent having hit a 11-year low of $0.64345 on Friday.

The New Zealand dollar was also on the defensive after sliding to a decade low of $0.6180 last week. It last traded at $0.6218, down 0.46 percent.

Selling spread to some emerging market currencies.

The Mexican peso and the South African rand both lost more than 1 percent in early Monday trade.

The Turkish lira, which has been weighed by the country's intensifying involvement in fighting in Syria, slipped a tad to record lows.

Among developed market currencies, the pound is seen more vulnerable than its peers at time of major economic crisis as UK's sizable current account deficit meant the country depends on foreign capital.

Investors are also fretting about Britain's negotiations with the European Union over a trade deal and whether a UK budget next month will include much more spending, which many investors say is necessary to boost economic growth.

Sterling traded at $1.2799, down 0.15 percent so far on the day, not far from its 4-1/2-month low of $1.2726 hit on Friday.

The pound stood near its lowest levels since October against the euro and the yen.

source: news.abs-cbn.com

Asian stocks, US Treasury yields fall as pandemic fears intensify

TOKYO -- Asian shares fell on Wednesday as a US warning to Americans to prepare for the possibility of a coronavirus pandemic drove another Wall Street tumble and pushed yields on safe-haven Treasuries to record lows.

The S&P 500 and the Dow Jones Industrial Average both shed more than 3 percent on Tuesday in their fourth straight session of losses.

That led MSCI's broadest index of Asia-Pacific shares outside Japan down 0.6 percent. Australian shares were down 1.77 percent, while Japan's Nikkei stock index slid 1.1 percent.

Yields on 10-year and 30-year US Treasuries teetered near record lows as worries about the economic impact of the virus outbreak boosted safe-haven assets.

Oil prices recovered some recent losses in Asia, but there are lingering concerns that expected output cuts by major oil producers will not be enough to offset a decline in global energy demand caused by the virus.

The World Health Organization says the epidemic has peaked in China, but concern that its spread is accelerating in other countries is likely to keep investors on edge.

"What we are seeing is share markets are playing catch up," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"Other asset markets have been flashing warning signs for weeks. A corrective bounce in equities is possible, but we still have a lot of downward momentum."

While the stock rout has been global, the recent pace of selling in Asia has not been as severe as it has on Wall Street, which has been hit hard by the escalation of virus cases outside of Asia.

The S&P 500 lost $2.14 trillion in market capitalization over the last four sessions, according to S&P Dow Jones Indices analyst Howard Silverblatt.

US stock futures rose 0.5 percent in Asia on Wednesday, but that did little to brighten the mood.

Adding to recent fears was an alert from the US Centers for Disease Control and Prevention on Tuesday warning Americans to prepare for the spread of coronavirus in the United States, signalling a change in tone for the Atlanta-based US health agency.

The virus has claimed almost 3,000 lives in mainland China but has spread to dozens of other countries. Of increasing concern to investors, however, in the rising death toll in other countries.

Drastic travel restrictions slammed the brakes on China's manufacturing and consumer spending, and there are worries other countries will face similar disruptions.

The yield on benchmark 10-year Treasury notes traded at 1.3521 percent on Wednesday in Asia, close to a record low of 1.3070 percent The 30-year yield stood at 1.8274 percent, above a record low of 1.7860 percent.

The decline in yields weighed on the dollar. The greenback was last quoted at 110.25 yen, continuing a pullback from a 10-month high of 112.23 yen.

The dollar traded at $1.0877 per euro, off an almost three-year high of $1.0778 reached on Feb. 20.

US crude ticked up 0.58% to $50.19 a barrel. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, have been sending signals that they will cut output further.

However, oil could come under more pressure as weekly US supply reports due later on Wednesday are expected to show a rise in inventories, according to a Reuters poll.

source: news.abs-cbn.com

World stocks drop, gold surges as coronavirus fears trigger flight for safety

SYDNEY -- Global shares and oil extended losses on Monday while safe-haven gold soared as the spread of the coronavirus outside China accelerated with infections jumping in South Korea, Italy and the Middle East, in a worrying new development in the outbreak.

South Korea put the country on high alert after the number of infections surged to over 600 with six deaths. In Italy, officials said a third person infected with the flu-like virus had died, while the number of cases jumped to above 150 from just three before Friday.

Iran, which announced its first 2 cases on Wednesday, said it had confirmed 43 cases and eight deaths, with most of the infections in the Shi'ite Muslim holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.

In a sign of panic, E-minis for the S&P 500 dropped 1 percent in early Asian trades while Nikkei futures slipped more than 1 percent too.

Australia's benchmark index slid 1.6 percent while New Zealand was down about 1 percent. South Korea's KOSPI index fell 2.2 percent.

That left MSCI's broadest index of Asia-Pacific shares outside Japan off 0.7 percent to 541.48, the lowest since Feb. 5. Japanese markets were closed for a public holiday.

"It promises to be an interesting session here in Asia, with the bears back wrestling a bit more of a say here, and gold and bond bulls feeling pretty good about their exposures," said Chris Weston, head of research at broker Pepperstone.

"The news flow from the weekend has changed the game somewhat, where the focus is much more on the threat of an outbreak outside of China."

The virus has killed 2,442 people in China, which has reported 76,936 cases, and slammed the brakes on the world's second largest economy.

It has spread to some 28 other countries and territories, with a death toll of around two dozen, according to a Reuters tally.

Investors fretted over the mounting economic toll from the virus, betting on more monetary policy action from central banks. In response, US Fed fund futures surged signalling more rate cuts later this year.

While markets had largely brushed aside fears of long-term economic damage from the virus, a steady drip of new cases in countries beyond China has kept concerns alive.

On Friday, US stocks were beaten down by concerns about the virus and after data showed American business activity stalled in February, signaling a contraction for the first time since 2016.

US chipmakers fell sharply last week as a flash reading of the IHS Markit services sector Purchasing Managers' Index dropped to its lowest level since October 2013. The manufacturing sector also clocked its lowest reading since August.

The dollar fell for a second straight session on Monday against the yen to be last at 111.48.

The Australian dollar, considered a liquid proxy for China plays, was down 0.4 percent as it languished near an 11-year low.

The euro eased a tad to $1.0836.

That left the dollar index slightly higher at 99.430.

Analysts expect the Korean won to slump against the dollar as one of the favorite risk proxies for investors.

The won has fallen more than 4.5 percent on the dollar so far this year. It was last unchanged at 1,206.87

"Whether this proves to be a driver of more mainstream FX pairs, such as AUDJPY and AUDUSD is yet to be seen, although AUDUSD looks the better short on the weekly chart," Pepperstone's Weston said.

Oil prices slid as investors fretted about crude demand being pinched by the impact of the coronavirus outbreak, while leading producers appeared to be in no rush to curb output.

Brent crude slumped 2.8 percent, or $1.63, to $56.87 a barrel while US crude dropped 2.6 percent, or $1.4, to $51.97 a barrel.

US gold futures climbed 1.2 percent at $1,668.6 an ounce. Spot gold jumped to a seven-year high of 1,678.58 after marking its biggest weekly gain last week since early August.

source: news.abs-cbn.com

Jump in coronavirus cases halts stock rally; dollar gains

NEW YORK/LONDON -- The dollar rose and global equity markets slumped on Thursday after a new methodology that boosted the coronavirus death toll in China unnerved investors, curbing a rally that had lifted US and European stocks to a series of record peaks.

Chinese officials said 242 people died in Hubei province on Wednesday, the biggest daily rise since the virus emerged in the provincial capital of Wuhan in December.

More than 14,000 new cases were reported in the province on Thursday, up from 2,015 new cases nationwide a day earlier, due to a change to include results from quicker computerized tomography (CT) scans that reveal lung infections, rather than relying just on laboratory tests to confirm cases.

The jump in reported cases halted a rally that lifted Wall Street's 3 main gauges, indexes for pan-regional European shares, Germany's DAX and Canada's S&P/TSX index.

Investors sought safety in US assets, pushing the yield on the 10-year US Treasury note lower as the euro plunged to a more than two-year low against the dollar. The euro fell to a four-and-a-half-year low against the Swiss franc.

The United States is expected to weather the economic impact of the virus better than the euro zone.

The chief economist of AXA Investment Managers, Gilles Moec, said the impact of the virus could be part of a "perfect storm" for Europe that hurts the economy for months before being compounded by a heated trade battle with the United States.

"We started with the premise that this virus would be worse than SARS and that has now become consensus," Moec said. "So attention turns to who is hit the hardest, and Europe is among the usual suspects and Germany in particular, given China is its biggest export market. So the reaction of the exchange rate is probably rational."

The dollar index rose 0.05 percent, with the euro down 0.3 percent at $1.0838.

Europe's main markets followed Asia into red, while stocks on Wall Street traded slightly lower to little changed.

MSCI's gauge of stocks across the globe shed 0.25 percent and its emerging markets index lost 0.42 percent.

The pan-European STOXX 600 index lost 0.02 percent.

The FTSE 100 in London slid 1.1 percent, derailed by steep falls in heavyweights Barclays and utility Centrica , along with the jolt to risk sentiment from the rise in coronavirus cases in China.

On Wall Street, the Dow Jones Industrial Average fell 128.11 points, or 0.43 percent, to 29,423.31. The S&P 500 lost 5.51 points, or 0.16 percent, to 3,373.94 and the Nasdaq Composite dropped 13.99 points, or 0.14 percent, to 9,711.97.

While the jump in reported coronavirus cases was unsettling, markets in Asia took the news in stride.

MSCI's broadest index of Asia-Pacific shares outside Japan snapped 2 days of 1 percent gains to close 0.1 percent lower as most markets across the region posted modest declines.

Oil prices rose, shrugging off bearish reports that cut demand forecasts for this year on the back of the coronavirus outbreak. China is the world's biggest oil importer.

Paring losses from earlier in the session, Brent crude rose 55 cents to settle at $56.34 a barrel, while U.S. West Texas Intermediate added 25 cents to settle at $51.42 a barrel.

Benchmark 10-year notes last rose 4/32 in price to push its yield down to 1.6139 percent. The yield earlier touched 1.568 percent.

US gold futures settled up 0.5 percent at $1,578.80 an ounce.

There was drama for Brexit-bound British markets.

The sudden resignation of the British finance minister Sajid Javid caused a jump in both sterling and British government bond yields amid bets that his replacement, the 39-year-old Rishi Sunak, will beef up spending.

Javid's departure, coming less than a month before he was due to deliver his first budget and after just 204 days on the job, made him the shortest-serving chancellor of the exchequer since 1970.

"I suspect he (Sunak) is likely to do whatever Boris Johnson tells him to do," said Nomura economist George Buckley. "I don't know what that means for the public finances and fiscal policy, but I doubt it will mean tighter fiscal policy."

source: news.abs-cbn.com