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Asian shares plunged Thursday after the World Health Organization declared a coronavirus pandemic and indexes sank on Wall Street.
Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK +0.36% closed down 4.4% and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.17% fell 3.6%. The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.14% dropped 1.7% while the smaller-cap Shenzhen Composite /zigman2/quotes/210598015/delayed CN:399106 +0.28% was down 2.5%. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.19% sank 3.8%, and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.84% , which fell into bear-market territory Wednesday, tumbled 7.3%.
Thailand’s benchmark plunged 9%. India’s Sensex swooned 7%.
“Some of the biggest markets, such as Hong Kong or Japan or Australia, are down around four to five percent. And we haven’t seen, you know, a significant buy-in interest yet, so traders are still in the get-out mode. They just want to have it in cash,” said Jackson Wong of Amber Hill Capital Ltd., in Hong Kong.
“So that’s a typical panic mode, but whether this panic mode will stop in the short term, it really will depend on how the virus incident goes forward,” Wong said.
In Japan, Prime Minister Shinzo Abe met with the central bank governor, who pledged to all he can to help support the economy, which contracted 7.1% in annual terms in the last quarter, before the virus outbreak even hit.
Bank of Japan Gov. Haruhiko Kuroda said the central bank “will take appropriate steps as needed.”
On Wall Street, the Dow’s /zigman2/quotes/210598065/realtime DJIA +0.05% loss dragged it 20% below the record set last month and put the index in a bear market. The broader S&P 500 /zigman2/quotes/210599714/realtime SPX -0.34% , which professional investors watch more closely, is a single percentage point away from falling into its own bear market, which would end the longest bull market in Wall Street history.
The future contracts for the Dow and the S&P 500 were both down more than 4% by Thursday afternoon in Asia.
The recent decline has been one of the swiftest sell-offs of this magnitude. The fastest the S&P 500 has ever fallen from a record into a bear market was over 55 days in 1987.
Vicious swings like Wednesday’s session are becoming routine as investors rush to sell amid uncertainty about how badly the outbreak will hit the economy. The day’s loss of 1,464.90 points wiped out a 1,167-point gain for the Dow from Tuesday and stands as the index’s second-largest point drop, trailing only Monday’s plunge of 2,013.
With Wall Street already on edge about the economic damage from the virus, stocks dove even lower Wednesday after the World Health Organization cited “alarming levels of inaction” by governments in corralling the virus when it made its pandemic declaration.
Investors are calling for coordinated action from governments and central banks to stem the threat to the economy from the virus. While lower interest rates and government spending won’t solve the crisis — only containment of the virus can — but they can support the economy.
President Donald Trump’s announcement of travel restrictions for most European countries and a multibillion-dollar aid package that the House could vote on on Thursday failed to lay doubts to rest.
“The government probably should have been thinking about stimulus last month,” said Kristina Hooper, Invesco’s chief global market strategist. “Every day that passes makes the economic impact of coronavirus that much worse.”