Asia Pacific equities lost their previous upward momentum in Thursday afternoon trade as concerns about the economic impact of the coronavirus pandemic continued to weigh on investor sentiment.
The main markets in the region fell deeply into negative territory, with the South Korean Kospi recording losses as it fell 6.86% while the Kosdaq index fell 7.5%. The Korean exchange said the first switches were activated after the Kospi fell 8%, with trade halted for 20 minutes, according to Reuters.
Hong Kong’s Hang Seng index fell 4.25% in the afternoon.
In the Philippines, where trading was stopped earlier this week, the PSE composite index plunged 12.42%, picking up on Thursday.
Elsewhere in Southeast Asia, the Jakarta composite index fell 5.35% lower. Indonesia’s stock exchange previously announced a temporary halt to trading after the Jakarta composite index fell 5%.
In Australia, the S&P / ASX 200 fell 3.53% after jumping before 2%. Employment data released Thursday by the Australian Bureau of Statistics shows that the seasonally adjusted unemployment rate for February is 5.1%.
Mainland China equities declined when the Shanghai composite declined by more than 2% while the Shenzhen composite declined 1,461%.
The Nikkei 225 in Japan slipped 1.42%, while the Topix index added 0.95%.
Overall, the ex Japan MSCI Asia Index fell 5.37%.
“What is really putting pressure on equity markets at the moment is actually liquidity from credit markets,” said Sean Taylor, Asia-Pacific’s Chief Investment Officer at DWS, CNBC’s “Street Signs”.
Taylor said investors should be “very cautious” and keep “very liquid” in the meantime.
Developments on the global coronavirus epidemic continued to be observed on Thursday.
The Reserve Bank of Australia (RBA) announced on Thursday a “full package”, which includes a reduction in the target cash rate to 0.25%, to support the country’s economy as it grapples with the impact of the virus.
“At some point, the virus will be contained and the Australian economy will recover,” said RBA governor Philip Lowe in a statement. “In the meantime, a priority for the Reserve Bank is to support jobs, incomes and businesses, so that when the health crisis subsides, the country is in the best position to recover strongly.”
Meanwhile, the United States Federal Reserve called on its emergency authority Wednesday to create support for primary money market mutual funds. The new Mutual Money Market Fund will provide loans to financial institutions to purchase assets from primary money market funds.
Shares in the region previously had a boost after the European Central Bank announced a new pandemic emergency purchase program on Wednesday that will use € 750 billion (approximately $ 821 billion) to buy stocks to help support the European economy. .
“The ECB will ensure that all sectors of the economy can benefit from supportive financing conditions that allow them to absorb this shock,” the central bank said in a statement. “This also applies to households, businesses, banks and governments. The Governing Council will do everything necessary within its mandate.”
So far, at least 207,860 have been infected while at least 8,657 people have been carried away by the disease globally, according to the latest data from the World Health Organization.
Overnight on Wall Street, the Dow Jones Industrial Average lost 1,338.46 points to close at 19,898.92. This was the first closing of the index below 20,000 since February 2017. The S&P 500 index fell 5.2% to 2,398.10 and ended its trading day almost 30% below of a record set last month. The Nasdaq Composite fell 4.7% to close at 6,989.84.
Rebound in oil prices
Oil prices attempted to recover from Wednesday’s losses. In the afternoon of Thursday’s Asian trading hours, futures on the Brent crude benchmark rose by 2.69% to $ 25.55 a barrel. U.S. West Texas intermediate crude added 8.49% to $ 22.10 a barrel.
The moves came after oil prices plunged on the third worst day on Wednesday. US crude fell 24.4% to $ 20.37 a barrel, the lowest level since February 2002. Brent oil fell 14.1% to $ 24.67, the lowest level since 2003.
The US dollar index, which tracks the greenback against a basket of its peers, lasted at 101.356 after rising from levels below 100 yesterday.
The Japanese yen was trading at 109.14 per dollar after seeing levels below 106 earlier in the week. The Australian dollar changed hands to $ 0.5579 after falling from above $ 0.6 levels earlier in the week.
Thomas— Thomas Franck and Steve Liesman of CNBC contributed to this report.