Asian Shares Extend Losses Monday 03/30 05:43
Asian shares started the week with fresh losses as countries reported
surging numbers of infections from the coronavirus that has prompted shutdowns
of travel and business in many parts of the world.
BANGKOK (AP) -- Asian shares started the week with fresh losses as countries
reported surging numbers of infections from the coronavirus that has prompted
shutdowns of travel and business in many parts of the world.
Japan's benchmark dropped almost 4% and other regional markets were mostly
lower. Shares in Australia rose after the government promised more
U.S. futures fell slightly more than 1% and oil prices also were lower.
Monday's drop followed a decline of more than 3% on Wall Street on Friday
despite hopes that a $2 trillion relief bill would ease the economic havoc
brought by the pandemic. The S&P 500 still gained 10.3% last week, its biggest
weekly win since 2009. The Dow Jones Industrial Average's 12.8% weekly gain was
its biggest since 1938. But the market is still down 25% from the peak it
reached a month ago.
The U.S. pandemic relief bill approved by the Congress and signed Friday by
President Donald Trump includes direct payments to households, aid to hard-hit
industries like airlines and support for small businesses. Despite the help,
analysts expect markets to remain turbulent until the outbreak begins to wane.
"Sentiment once again took a turn for the worse going into a week of
reckoning by means of economic fundamentals," Jingyi Pan of IG said in a
commentary. "The rally seen for Wall Street last week may amount to little more
but a relief rally with sentiment turning sour once again going into a fresh
Early Monday, Tokyo's Nikkei 225 dropped 3.7% to 18,680.72 and the Kospi in
South Korea lost 2.3% to 1,678.51. The Shanghai Composite shed 1.6% to
2,728.65, while the Hang Seng in Hong Kong lost 1.8% to 23,070.19.
Australia's S&P/ASX 200 added 2.3% to 4,955.70 as the government prepared to
announce fresh economic support measures for businesses.
The push to deliver financial relief has gained urgency as the outbreak
widens. The number of cases in the U.S. has now surpassed those in China and
Italy, climbing to more than 142,000 known cases, according to Johns Hopkins
University. The worldwide total has topped 721,000, and the death toll has
climbed to nearly 34,000, while more than 151,000 have recovered.
For most people, the new coronavirus causes mild or moderate symptoms, such
as fever and cough that clear up in two to three weeks. For some, especially
older adults and people with existing health problems, it can cause more severe
illness, including pneumonia, or death.
The damage to corporate profits, the ultimate driver of stock prices,
remains uncertain. Very few companies have dared to issue forecasts capturing
the damage, though traders are girding for discouraging results in the next few
weeks as earnings reporting season begins. Many companies have simply withdrawn
their profit forecasts altogether.
At the start of this year, analysts expected S&P 500 companies' earnings
would grow 4.4% in the January-March quarter. They now expect earnings will be
down 4.1%, according to FactSet.
Earnings for airlines, which have been hit by lost bookings as businesses
and individuals canceled travel plans to minimize their risk of contracting the
virus, are expected to be catastrophic. Delta went from an expected 2.2%
decline to a 108% plunge.
The S&P 500 lost 3.4% on Friday to 2,541.47. The Dow slid 4.1%, to
21,636.78. The Nasdaq lost 3.8% to 7,502.38. The Russell 2000 index of smaller
company stocks fell 4.1%, to 1,131.99.
The price of crude oil also declined on Monday. U.S. benchmark crude dropped
5.1% or $1.11 to $20.40 per barrel in electronic trading on the New York
Mercantile Exchange. It slid 4.8% to close at $21.51 a barrel on Friday.
Goldman Sachs has forecast that it will fall well below $20 a barrel in the
next two months because storage will be filled to the brim and wells will have
to be shut in.
Brent crude, the international standard, gave up 4.6% or $1.28 to $26.67 per
Lower oil prices spell trouble for energy companies, which are lagging far
behind the rest of the market. The price of oil has plunged recently, in part
due to a price war that broke out early this month between Saudi Arabia and
Russia. The energy sector of the S&P 500 has lost half its value this year.
The yield on the 10-year Treasury slipped to 0.65% from 0.68% late Friday.
Lower yields reflect dimmer expectations for economic growth and greater demand
for low-risk assets.
In currency trading, the dollar was at 107.23 Japanese yen, down from 107.94
late Friday. The euro weakened to $1.1091 from $1.1142.