Asia markets bounce back as investors monitor China’s return to production

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Asia markets mostly recovered on Wednesday after tumbling a day before, with investors closely monitoring China’s progress in returning to work as the country deals with the coronavirus outbreak. Oil prices also bounced back.

Hong Kong’s Hang Seng index rose 0.47% in the afternoon. The city reported its second coronavirus death, marking the sixth fatality outside mainland China.

Mainland Chinese stocks erased earlier gains to decline by the close. The Shanghai composite lost 0.32% to 2,975.40, and the Shenzhen component declined 0.63% to 11,235.60. The Shenzhen composite slid 0.55% to close at 1,846.40.

Japan’s Nikkei 225 returned to positive territory, jumping 0.89% to close at 23,400.70 after slipping more than 1% the day before. The Topix was up 0.37% to 1,671.86.

On Monday, data showed Japan’s growth declining much worse than expected, shrinking the fastest in six years. Its outlook was also dimmed by the impact of coronavirus hitting the economy.

Japan released its trade data for January, showing that exports fell 2.6% year-on-year, less than the 6.9% drop expected by economists in a Reuters poll. In December, Japan’s exports fell 6.3%.

South Korea’s Kospi edged up to close at 2,210.34.

Australia’s ASX 200 rose 0.43% to 7,144.60. Gold stocks surged as prices of the safe-haven asset jumped again. Evolution Mining soared 5.13% and Newcrest bounced 3.25%.

Australia-listed shares of Domino’s Pizza surged as high as 15.2% before jumping 9.64% by the close. The pizza chain on Wednesday reported half-year net profits soared nearly 30% to 69.2 million Australian dollars ($46.3 million), while revenue jumped 29%, according to Reuters.

Following a slump in spending from Chinese gamblers, Australian casino operator Crown Resorts said its half-year profit tumbled.

As the country imposed restrictions on anyone arriving from mainland China, the casino saw turnover from high rollers, who are largely Chinese, plummet by more than a third. Its shares closed down 0.34%.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.47%.

U.S. stocks overnight tracked yesterday’s fall in Asia markets, after Apple’s warned that it does not expect to meet its quarterly revenue forecast, and cited slowed production and weakened demand in China as a result of disruptions from the outbreak.

The Dow Jones Industrial Average fell for a third consecutive day on Tuesday after a return from a holiday. Apple closed 1.8% lower, with the news sparking a selloff in stocks of its Asia suppliers the day before.

The impact of the outbreak on businesses in China and around the world has dragged down economic growth forecasts for the year. Moody’s Investors Service yesterday lowered the growth forecast for China from 5.8% to 5.2% for 2020.

Singapore, one of the worst hit by the outbreak outside China, unveiled its budget on Tuesday. The Southeast Asian nation said it has set aside 5.6 billion Singapore dollars ($4.02 billion) in the coming year to help businesses and households tide through the ongoing coronavirus outbreak.

Singapore’s benchmark Straits Times index last rose 0.64%.

NIKKEI Nikkei 225 Index NIKKEI 23400.70 206.90 0.89
HSI Hang Seng Index HSI 27655.81 125.61 0.46
ASX 200 S&P/ASX 200 ASX 200 7144.60 30.90 0.43
SHANGHAI Shanghai SHANGHAI 2975.40 -9.57 -0.32
KOSPI KOSPI Index KOSPI 2210.34 1.46 0.07
CNBC 100 CNBC 100 ASIA IDX CNBC 100 8733.93 29.89 0.34

China’s return to work after its extended shutdown will be closely tracked. State media reported on Tuesday that more than 80% of its central state-owned enterprises’ roughly 20,000 manufacturing subsidiaries have resumed work.

But Rodrigo Catril, senior foreign-exchange strategist at the National Australia Bank, cast doubt on the actual progress, in a note on Wednesday. “This news should have been embraced warmly by the market, however high-frequency data such as pollution levels and traffic congestion gauges in Beijing do not at this stage corroborate the upbeat official message, keeping investors wary,” he said.

“There were moments of optimism around restarts of business activities in China … following China’s stimulus announcements,” ANZ Research’s John Bromhead said in a note. “However, these waned after key companies raised concerns about the impact of supply and demand disruptions.”

Currencies and oil

Oil prices jumped back up in the morning during Asia hours after falling with stocks on Tuesday.

Global benchmark Brent bounced 0.88% to $58.26 a barrel while U.S. crude jumped around 1% to $52.58.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 99.424, rising from an earlier low of 99.139.

The safe-haven Japanese yen weakened to 110.12, after trading at around the 109 level for the past few days. The Australian dollar strengthened to 0.6703, from around the 0.66 level earlier.

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