Asia Stocks Plunge Following U.S. Rout: Markets Wrap

Photo: Bloomberg

(Bloomberg) — Stocks tumbled in Asia following the worst Wall Street session since 1987, with investors spooked that emergency fiscal and monetary packages won’t be enough to stave off a recession. Treasuries edged up with the dollar.

Japanese equities plunged 10% at one point and Korean stocks sank more than 7%. The slide triggered trading halts in Thailand, Indonesia and South Korea. Global equities are heading for the worst week since 2008 as investors price in a severely weaker outlook due to the hit from the coronavirus pandemic. Futures on the S&P 500 dropped more than 2% after the index lost 9.5% on Thursday. Currencies in South Korea and Indonesia sank, while bonds in Australia and Japan declined, as investors rushed toward cash.

In China, the Shanghai Composite Index was down 3.3% midway through the trading day, while Hong Kong's benchmark Hang Seng Index was down 5.8%.

“Markets remain in a free-fall as uncertainty persists with no reliable anchor which can create near-term stability,” said Ben Emons, managing director of global macro strategy at Medley Global Advisors in New York.

Investors are doubting the efficacy of policy responses as coronavirus cases continue to grow across the world and restrictions on people and businesses crush sentiment. The Bank of Japan on Friday followed an earlier move from the Federal Reserve to inject liquidity. The Bank of Korea said it is closely monitoring bond markets and will take action if it deems they are needed, while the European Central Bank eased capital constraints and boosted liquidity on Thursday.

These are some of the most notable moves:

-- Japan’s Topix index fell 7.2%, taking losses this year to 28%.

-- The Hang Seng Volatility Index surged 29%, has more than doubled this week.

-- The MSCI All-Country World Index extended losses to enter bear-market territory and is now down 24% this year.

-- The JPMorgan G7 Volatility Index of currencies is up 55% this week.

-- The cost of insuring debt issued by Europe’s investment grade companies surged to the highest since 2016.

-- Bitcoin plunged below $5,000.

“Everyone wants to go to cash,” Kieran Calder, head of equity research for Asia at Union Bancaire Privee, told Bloomberg TV.

Meantime, New York City has now declared a state of emergency, France and Portugal said they will close all schools and a leading U.S. infectious disease official said the testing system in that country is failing. Walt Disney Co. is shutting its Disneyland resort in California from Saturday, following previous closures in Asia.

These are the main moves in markets:

Stocks

-- Japan’s Topix index was down 7.2% as of 11:52 a.m. in Tokyo.

-- Hong Kong’s Hang Seng retreated 5.8%.

-- South Korea’s Kospi tumbled 7.6%.

-- Australia’s S&P/ASX 200 Index lost 6%.

-- Futures on the S&P 500 Index dropped 2.1%. The index declined 9.5% Thursday.

Currencies

-- The euro was at $1.1194, little changed.

-- The yen was at 105.53 per dollar, down 0.4%.

-- The offshore yuan was flat at 7.0258.

Bonds