By Associated Press
Share prices in Asia bounced back Monday from last week’s retreat, with mainland Chinese indexes gaining more than 3% as data showed progress in restoring factory output after weeks of disruptions from the viral outbreak.
Stocks have been swooning as investors fret the coronavirus outbreak will derail the global economy. But in those declines, some see opportunities to buy.
Japan’s Nikkei 225 index /zigman2/quotes/210597971/delayed JP:NIK +0.67% recovered from early losses, gaining 1% to 21,344.08 after the Bank of Japan promised to step in to support the economy. The Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +0.48% rose 3.2%. The Shenzhen /zigman2/quotes/210598015/delayed CN:399106 +0.27% jumped 3.8%. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +2.18% climbed 0.8% and the Hang Seng /zigman2/quotes/210598030/delayed HK:HSI +2.41% in Hong Kong added 0.6%.
Bank of Japan Gov. Haruhiko Kuroda issued a statement Monday, after an early plunge in share prices, saying the central bank “will closely monitor future developments, and will strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases.”
On Friday, the BOJ issued plans for purchases of assets for the coming weeks: the central bank already buys tens of billions of dollars’ worth of government bonds and other assets each year as part of its aggressive efforts to maintain cheap credit to help prevent deflation.
Shares fell in Australia, where the S&P ASX/200 /zigman2/quotes/210598100/delayed AU:XJO +0.36% lost 0.8% and in Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 -0.45% , which fell 1%. Stocks were mostly higher in Southeast Asia.
U.S. futures briefly saw a moderate recovery, with the contract for the Dow Jones Industrial Average /zigman2/quotes/210407078/delayed YM00 +0.20% rising while futures for the S&P 500 /zigman2/quotes/209948968/delayed ES00 +0.39% also gained, but those advances evaporated.
“It may well be a case of news being not as bad as it could have been,” Jeffrey Halley of Oanda said in a commentary. “Today’s rallies across Asia have a definite relief rally look to them. Measured against the scale of last week’s sell-offs, the bounces this morning are small.”
Stocks sank Friday on Wall Street, extending a rout that left the market with its worst week since October 2008. Meanwhile, bond prices have soared as investors sought safety, pushing yields to record lows. On Monday, the yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.10% , a benchmark for home mortgages and many other loans, was at 1.14%, held steady from Friday’s levels.
The Dow /zigman2/quotes/210598065/realtime DJIA -0.57% fell 1.4% to 25,409.36. The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.30% slid 0.8% to 2,954.22, while the Nasdaq /zigman2/quotes/210598365/realtime COMP +0.09% rose 0.1%, to 8,567.37.
The damage from the week of relentless selling was eye-popping: The Dow Jones Industrial Average fell 3,583 points, or 12.4%. Microsoft /zigman2/quotes/207732364/composite MSFT +0.44% and Apple /zigman2/quotes/202934861/composite AAPL +1.61% , the two most valuable companies in the S&P 500, lost a combined $300 billion. In a sign of the severity of the concern about the possible economic blow, the price of oil sank 16%.
The market’s losses moderated Friday after the Federal Reserve released a statement saying it stood ready to help the economy if needed. Investors increasingly expect the Fed to cut rates at its next policy meeting in mid-March.
The virus outbreak that began in central China has rattled markets as authorities shut down industrial centers, emptying shops and severely crimping travel all over the world. Companies are warning investors that their finances will take a hit because of disruptions to supply chains and sales. Governments are taking increasingly drastic measures as they scramble to contain the virus.
The rout has knocked every major index into what market watchers call a “correction,” or a fall of 10%, but not more than 20%, from a peak. The last time that occurred was in late 2018, as a tariff war with China was escalating.This recent decline comes as stocks were considered overpriced before the outbreak and overdue for another pullback.
The latest losses have wiped out the S&P 500’s gains going back to October. The benchmark index is still up 6.1% over the past 12 months, not including dividends. Its weekly loss of 11.5% was the biggest since an 18.2% drop in the week ending October 10, 2008.