Financial markets in Asia reeled on concern a deadly virus emanating from China will spread through the region. Four people are reported dead sending panic across Japan, Thailand, South Korea, as well as other parts of China.
Moves were exacerbated as traders closed out positions in the run-up to Lunar New Year holidays.
Chinese shares in Hong Kong headed for their worst day since October 2018, while global traders offloaded more than 7 billion yuan ($1 billion) of mainland shares through exchange links. MSCI Inc.’s Asian gauge dropped 1%.
ASX 200 (-0.2%) pulled back from record highs amid broad sector weakness and with BHP pressured after quarterly iron ore production fell short of analyst estimates.
Nikkei 225 (-0.9%) retreated below 24k as Japanese exporters suffered from safe-haven flows into the domestic currency.
Elsewhere, Hang Seng (-2.5%) and Shanghai Comp. (-1.3%) also declined with the former reeling after Moody’s downgraded Hong Kong’s sovereign rating by 1 notch to Aa3, and amid heightened concerns surrounding the ongoing coronavirus outbreak which has spread to more Chinese cities with 224 cases confirmed so far resulting to 4 deaths.
Additionally, the USDJPY fell to lows of 109.90/85 during early trade on Tuesday as investors sought refuge in safer assets.
Moreover, the EURUSD came out strong on the back of a stronger than anticipated German Zew Economic Sentiment as Germany is a huge part of the European Union.
Impressive UK wage figures coupled with low unemployment rate at 3.8% in November drove GBPUSD toward 1.31.
XAUUSD had a bullish trend rising in the Asian and European markets on reports of the spread of the coronavirus in China.
The reaction seeped into broader global markets. S&P 500 Index futures fell 0.4%, while the dollar climbed against all but two of 16 major peers.
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