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Asian Markets Mixed as Shanghai Gains 1.3%


The Asian and Pacific Rim markets were mostly mixed on Monday as Asian traders tried to gauge the economic impact of the fast spreading and deadly coronavirus. This virus has now infected over 70,000 people and killed over 1,700.

In Japan, the benchmark Nikkei 225 fell 0.64 percent. The Topix index, in Tokyo, fell 0.85 percent. The Cabinet Office released economic data.

This data showed that the Japanese economy shrunk (year on year) by 6.3 percent for the final quarter of 2019. This was well over the expected 3.7 percent contraction. On a quarterly basis the gross domestic product (GDP) fell 1.6 percent for the same time period.

Elsewhere in the Asian and Pacific Rim, the Australian ASX 200 recovered early losses to lose a fraction of a percent by the late afternoon. The heavily weighted financial sub-index lost 0.7 percent.

In South Korea, the Kospi composite index reversed early losses to gain 0.1 percent and in Hong Kong, the Hang Seng index was up 0.45 percent.

In China, the Shanghai composite was up 1.3 percent. The smaller Shenzhen composite added 1.7 percent and the Shenzhen component rose 1.48 percent.

Asian Traders Gauge Economic Damage as the PBOC Acts to Support the Economy

China has announced that in order to support the economy and alleviate the shock of the coronavirus outbreak against business, that they will enact targeted tax breaks.

Beijing, according to Finance Minister Liu Kun, in China’s Communist Party magazine Qiushi, said that they are planning fiscal stimulus and increasing government spending.

The Ministry of Finance also said, back on Saturday, that they would inject 8 billion yuan to support businesses as well as virus prevention and control. As of Friday, the Chinese Finance Ministry had already allocated over 90 billion yuan to support efforts in this area.

The Peoples’ Bank of China (PBOC), their central bank, also announced monetary efforts to insulate the economy and spur economic growth as the outbreak has hit China hard. The PBOC cut rates on medium-term loans to businesses.

The coronavirus which stared in Wuhan, central China, will have a big impact on China’s economic growth as well as the global economy. Travel for the Lunar New Year was just a fraction of what it had been during prior years as travel restrictions hit the industry hard.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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