Jan22,2020: Asian stock markets slumped Tuesday as a SARS-like virus taking hold in China spooked investors, while sentiment suffered a knock also from a credit-ratings downgrade to major financial hub Hong Kong, analysts said.
Most European and US markets followed Asia lower after Hong Kong slumped 2.8 percent by the close and Shanghai ended with a loss of 1.4 percent.
Moody’s has lowered its credit rating on Hong Kong, which has likely fallen into recession owing to the unrest as well as the China-US trade war.
Meanwhile, jitters on trading floors saw investors also shift out of higher-yielding, riskier currencies with the dollar up against the South Korean won, the Australian dollar and the Indonesian rupiah, among others.
But the greenback retreated against the haven currency yen, while gold, another go-to asset in times of uncertainty, gained in Asian trading.
The pound climbed against the dollar and euro as official data showed British unemployment is unchanged at 3.8 percent, reducing the likelihood of the Bank of England cutting rates next week according to analysts.
In stocks trading, “the FTSE 100 was lower… taking its cue from selling in Asia amid growing concern about the coronavirus in China,” said AJ Bell investment director Russ Mould.
“The markets will be watching nervously amid reports the deadly virus has spread to neighbouring countries, with all the potential economic disruption that could cause.”
The number of people in China infected by a new SARS-like virus jumped to 291 on Tuesday, according to authorities.
The virus has so far killed six people, and more than 900 are under medical observation, said the National Health Commission.
The new coronavirus strain has caused alarm because of its connection to Severe Acute Respiratory Syndrome (SARS), which killed nearly 650 people across mainland China and Hong Kong in 2002-03.
