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GLOBAL MARKETS-Asian shares set for rough ride on virus fears, China in focus

Published 03/02/2020, 10:40 am
Updated 03/02/2020, 10:43 am
© Reuters.  GLOBAL MARKETS-Asian shares set for rough ride on virus fears, China in focus
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Australian, NZ shares fall; oil slides, gold firm

* Coronavirus death toll in China rises to 350

* China cbank to inject $174 bln liquidity on Monday

* Economists lower growth forecasts for Chinese economy

By Swati Pandey

SYDNEY, Feb 3 (Reuters) - Asian markets are set for another bumpy ride on Monday on fears about the hit to world growth from the rapidly spreading coronavirus, with all eyes on China where trading resumes following the Lunar New Year break.

A total of 350 people have died in China from the new virus with the first death out of the mainland reported on Sunday in the Philippines. to head off a panic, China's central bank plans to inject 1.2 trillion yuan ($173.8 billion) of liquidity into the markets via reverse repo operations on Monday. also said it would help firms that produce vital goods resume work as soon as possible, state broadcaster CCTV reported. the measures, Australia's benchmark index .AXJO opened in the red to be down 0.7% while New Zealand shares .NZ50 faltered 1.8%. Futures for Japan's Nikkei NKc1 were slightly higher but still about 500 points below where the index closed on Friday.

"These initial interventions aim to boost confidence, but they are unlikely to be sufficient to curtail a sharp downturn in Q1," Citi economists said in a note.

"As most employees won't return to work until Feb. 9, the output losses are likely to be larger than expected, and incoming economic activity data will continue to prompt the authorities to take more actions in order to reduce the adverse impact of the Wuhan coronavirus on the economy."

For Chris Weston, a Sydney-based strategist at broker Pepperston, "the big unknown" was how China's financial markets respond to the show of force from the country's central bank.

"The fact the China Securities Regulatory Commission (CSRC) has detailed they see the impact of the coronavirus as 'short-lived' is designed to instil confidence," Weston said. "Whether the market feeds off this optimism is another thing given the spread of the virus is still in its exponential stage."

Economists tempered their outlook for the world's second-largest economy, as travel curbs and supply chains disruptions are likely to crimp Chinese growth. revised its full-year forecast for China's GDP growth to 5.5% in 2020 from 5.8%. It also cut first-quarter growth expectations to 4.8% from 6% in the fourth quarter of 2019.

JPMorgan (NYSE:JPM) shaved its forecast for global growth by 0.3 percentage point for this quarter.

Data out of the United States and Europe on Friday too pointed to economic weakness while a mixed batch of corporate earnings added to the gloom. decline in Asian equities follows a steep sell-off in global share markets, which, on Friday, posted their biggest weekly and monthly declines amid growing concerns about the economic impact of the coronavirus outbreak in China. MKTS/GLOB

On Friday, the Dow .DJI fell 2.1%, the S&P 500 .SPX declined 1.8% and the Nasdaq Composite .IXIC dropped 1.6%.

Indicating a stable start for U.S. shares, E-Mini futures for the S&P500 ESc1 opened a tad higher on Monday.

The safe-haven Japanese yen JPY= held near a 3-1/2 week high after adding about 1.5% in the last two weeks. The risk sensitive Australian dollar AUD=D3 , which is often traded as a liquid proxy for the Chinese yuan, tumbled 2% last week to hit a four-month trough.

Gold, which posted its best month in five in January, was last up 0.1% at $1,591.26 while yields on U.S. debt lingered near five-month lows as the United States, Japan and other countries tightened travel curbs to China, where the death toll from the virus rose to 213.

Oil futures were down on worries about a slowdown in demand with Brent crude LCOc1 sliding 39 cents to $56.24 a barrel, the lowest since January 2019.

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes)

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