National Australia Bank estimates viral outbreak could
reduce China's economic growth rate by one percentage point.
With many people around Asia preparing for the
Lunar New Year, share prices held steady on Friday despite
investors' fears that a new coronavirus in China could spread faster
as millions of people would be travelling over the weeklong holiday.
Markets had steadied overnight, as investors took some
solace from the World Health Organization (WHO) labelling the outbreak an
emergency for China, where 25 people have died and at least 800 have been
infected, but not, as yet, for the rest of the world.
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.1 percent, while Japan's Nikkei fell a marginal 0.05 percent and
Australian stocks added 0.3 percent. Hong Kong's benchmark Hang Seng Index
gained 0.15 percent.
Financial markets in mainland China, Taiwan and South Korea
were all closed on Friday.
"Investors are worried that the outbreak of coronavirus
will dampen consumption in China when the Chinese economy has been already
cooling down," said Yasuo Sakuma, chief investment officer at Libra
Investments.
Indeed, National Australia Bank's research team tentatively
estimated China's gross domestic product (GDP) growth for the first quarter
could be hit by approximately 1 percentage point by the latest
deadly coronavirus outbreak.
"The impact on Chinese growth could be significant
given the outbreak coincides with the Chinese New Year," said Tapas
Strickland, NAB's director of economics.
"Measures to isolate the outbreak has meant 26 million
people in cities or near urban areas are in lockdown or have limited travel.
New Year festivities are also curbed in Beijing and Macau."
The stance taken by WHO over epidemic provided enough relief
for US markets to advance further.
The Nasdaq Composite rose 0.2 percent to a record closing
high, while the S&P 500 added 0.1 percent and the Dow Jones Industrial
Average eased 0.1 percent.
"So far, reports of the fatalities show them to be
largely amongst the elderly, and those with pre-existing chronic
conditions," Robert Carnell, chief economist and head of research for the
Asia-Pacific region at Dutch bank ING said in an emailed note.
"That doesn't mean there won't be an economic or market
response to this. But it does suggest that the response will be manageable, and
hopefully fairly short-lived, weeks and months, not quarters or years," he
added.
In the currency market, the concerns about the virus
supported the safe-haven yen.
The Japanese currency traded at 109.47 per dollar, having
risen to a two-week high of 109.26 yen on Thursday.
The euro fell to a seven-week low versus the dollar of
$1.1036 overnight after the European Central Bank left its policy rates
unchanged but President Christine Lagarde struck a slightly dovish tone than
some had expected.
The common currency last stood at $1.1053, down a marginal
0.05 percent on the day.
The offshore yuan softened to 6.932 per dollar, a day after
hitting a two and a half weeks low of 6.942 yuan.
Coronavirus fears continued to weigh on commodity prices.
Oil prices remained under pressure on the growing concern
that fuel demand will weaken as the spread of a respiratory virus from
China dents travel and darkens the economic outlook.
Brent crude futures shed as much as 0.16 percent to below
$62 a barrel in early Asian trade on Friday, its lowest since December 4, after
falling 1.9 percent in the previous session.
US West Texas Intermediate (WTI) futures declined as much as
0.22 percent to $55.47 and were on course for a 5 percent fall for the week.
Elsewhere, copper prices fell to their lowest in more than
six weeks overnight.
SOURCE: NEWS AGENCIES
