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Asian Shares Tumble as Virus Worries Dominate

James Hyerczyk

The bears regained control of the major Asia-Pacific stock markets on Wednesday after another one-day reprieve from the selling pressure. Once again, the trade was turbulent with wild, two-sided swings the norm as the rapidly spreading coronavirus continued to exert its influence on investor sentiment. Despite billions of dollars being thrown at the economy and the markets, the price action strongly suggests that investors won’t be satisfied until the effects of virus peak or until a cure is found.

On Wednesday, Japan’s Nikkei 225 Index closed at 16726.55, down 284.98 or -1.68%. Hong Kong’s Hang Seng Index finished at 22291.82, down 971.91 or -4.18% and South Korea’s KOSPI Index closed at 1581.20, down 81.24 or -4.86%.

In China, the Shanghai Index settled at 2728.76, down 50.88 or -1.83%. Australia’s S&P/ASX 200 Index finished at 4953.20, down 340.20 or -6.43%.

Save the People or Save the Economy?

The actions by the governments seem to fall into two camps – Save the People or Save the Economy.

The latest headlines show that governments across the world have taken drastic measures as they seek to slow the spread of the virus, with European Union member nations agreeing to close the EU’s external borders to most people from other countries for 30 days. In Asia, Malaysia will close its borders, schools and most businesses from Wednesday until March 31.

In the U.S., major sporting events, conventions and concerts have all been cancelled. Some bars and restaurants have been closed for 30 days. Domestic airlines are still flying, but could be shut down at any time. Kindergartens to universities have been shut down.

The governments’ attempts to protect their citizens is noble, but it’s also been deadly to their economies. Cash is just not circulating.

And while people complain about individuals hoarding hand sanitizers and toilet paper, investors have been hoarding the safe-haven U.S. Treasurys and U.S. Dollar. The hoarding of Treasurys has been so powerful that the Fed had to step in to make emergency moves to prevent the economy from shutting down.

Japanese Exports Fall Less than Expected

Japan’s exports declined 1% in February as compared to a year earlier, according to provisional data released by the country’s Ministry of Finance on Wednesday. That compared against a 4.3% drop expected by economists in a Reuters poll.

Australia Retail Sale in February Rise 0.4% in Preliminary Data

Australian retail sales were estimated to have risen 0.4% on a seasonally adjusted basis in February, according to a preliminary data series released for the first time on Wednesday by the Australian Bureau of Statistics (ABS).

New Zealand Current Account Deficit Narrows to $1.9 Billion

New Zealand’s seasonally adjusted current account deficit narrowed to $1.9 billion in the December 2019 quarter, Stats NZ said today. This is the smallest deficit since the September 2017 quarter.

This article was originally posted on FX Empire

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