Asia stocks inch higher as new coronavirus cases fall; STI up 0.2%

TOKYO – Asian shares and Wall Street futures nudged higher on Wednesday (Feb 12) amid hopes the worst of the coronavirus in China may have passed, although prevailing uncertainty about the outbreak has kept investors wary.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 per cent. Australian shares were up 0.27 per cent, while Japan’s Nikkei stock index rose 0.45 per cent.

Singapore’s Straits Times Index opened higher and was up 6.61 points or 0.21 per cent to 3,182.18 at 9:18am. The index closed 0.4 per cent higher on Tuesday.

Oil futures, which have been in a downtrend since the start of the year, rose in Asia from 13-month lows due to budding optimism about the virus and hopes that output cuts by major producers will support prices.

The yuan held gains in offshore trade and safe-havens such as Treasuries, the yen and the Swiss franc were marginally weaker in a sign of slowly improving sentiment.

The global mood brightened after China’s senior medical adviser said on Tuesday the number of new coronavirus cases was falling in some provinces and forecast the epidemic would peak this month.

The number of new cases in Hubei, the province at the epicentre of the outbreak, was 1,068 as of Tuesday, down from a peak of over 3,000 new cases on Feb 4, and the lowest number of new infections since Jan 31.

Investors will likely need to see more evidence that the virus, which emerged in the central Chinese city of Wuhan late last year and has spread to 24 other countries and territories, is indeed receding before they take on more risk.

Concerns that the virus will slow factory activity and consumer spending in the world’s second-largest economy have roiled global stocks and commodities, and many of these markets are still trying to regain their footing.

“Evidence suggests the positive mood will continue, and we see some coordination in markets with oil rallying, base metals up and Treasuries coming under pressure,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“It does appear there is increasing comfort that the virus won’t impact growth in a significant way, but I am not ready to buy risk assets yet.”

US stock futures rose 0.12 per cent in Asia on Wednesday. The S&P 500 and the tech-heavy Nasdaq inched to their second consecutive closing high on Tuesday.

Benchmark 10-year Treasury notes fell further in Asia, pushing yields up to 1.6057 per cent.

Treasury prices declined on Tuesday after US Federal Reserve chairman Jerome Powell said the US economy is resilient.

Powell also said he is closely monitoring the coronavirus in China, because it could lead to disruptions that affect the global economy.

Chinese firms and factories are struggling to get back to work after the extended Lunar New Year holiday. Some companies say they need loans and are laying off workers as supply chains for global firms from car manufacturers to smartphone makers ruptured.

China’s foremost medical adviser on the outbreak, Zhong Nanshan, told Reuters numbers of new cases were falling in some provinces and forecast the epidemic would peak this month, although investors remained sceptical.

In the commodities market, US crude futures ticked up 0.32 per cent to US$50.10 a barrel on hopes that Chinese demand for oil will pick up once the flu-like virus is contained.

Saudi Arabia wants global oil producers to agree a quick supply cut in response to the coronavirus, sources familiar with the kingdom’s thinking have told Reuters, which is another supportive factor for crude futures.

In the offshore market, the yuan was little changed at 6.9682 per US dollar but close to a two-week high.

The yen traded at 109.82 versus the greenback, on course for its third day of decline, while the Swiss franc held steady at 0.9755 against the dollar.

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