Asian shares mostly fell Friday as investors turned cautious following a surge in cases of a new virus in China that threatens to crimp economic growth and hurt businesses worldwide.
Japan’s Nikkei 225 fell 0.7% in morning trading to 23,667.18. Australia’s S&P/ASX 200 inched up 0.1% to 7,112.60. South Korea’s Kospi was little changed at 2,234.50. Hong Kong’s Hang Seng slipped 0.3% to 27,730.00, while the Shanghai Composite dropped 0.7% to 2,906.07.
The pessimism echoes a decline on Wall Street that snapped a three-day streak of record highs for the S&P 500 and Nasdaq composite. The selling marked only the second day this month that the market has declined.
Investors had largely set aside worries about the economic impact of the virus outbreak the past two weeks. Markets rallied this week partly because the number of new cases appeared to be slowing.
Hopes were dashed by sharp increases in both the number of cases and newly reported deaths Thursday after the hardest-hit province of Hubei began counting doctors’ diagnoses without waiting for laboratory results in hopes of getting patients treated faster.
“We’re in a data-dearth period in the sense that we’re not really going to know fully the effects of the impact of that on Asian and Chinese growth, as well as global growth, for at least several weeks,” said Lisa Erickson, head of traditional investments at U.S. Bank Wealth Management. “You’re just going to see some back-and-forth movement (in the market) until that time.”
The S&P 500 index dropped 5.51 points, or 0.2%, to 3,373.94. The Dow Jones Industrial Average slid 128.11 points, or 0.4%, to 29,423.31. It was down as much as 205 points earlier.
The Nasdaq fell 13.99 points, or 0.1%, to 9,711.97. The Russell 2000 index of smaller company stocks rose 4.36 points, or 0.3%, to 1,693.74.
The reclassification of the COVID-19 cases in Hubei brought a huge increase in the global tally, complicating efforts to understand the trajectory of the outbreak.
But Stephen Innes chief market strategist at AxiCorp, said he believes the economic impact from the virus outbreak would likely be limited and the disease might be contained by March.
“The market impact was little more than a pause in the general bullish upward trend rather than risk-off,” he said, referring to the reaction to the higher case numbers.
Businesses have already been hurting due to the outbreak and more of them are warning that the effects will linger through the year.
Organizers of the world’s biggest mobile technology fair cancelled the event, set to take place in Spain, because of health and safety concerns. Europe has had a scattered number of cases, mostly connected to Chinese travel.
Travel-related companies fell broadly Thursday, shedding some of their gains from earlier in the week. Airlines helped pull industrial sector stocks lower. United Airlines fell 1.5%.
MGM Resorts International, which gets about 20% of its revenue from the gambling haven of Macau, pulled its profit forecast for 2020. The stock lost 5.5%. Cruise line operator Carnival slid 2%.
Technology and health care stocks were among the biggest decliners, along with companies that rely on consumer spending. Cisco Systems fell 5.2%, Mylan slid 2.3% and Hanesbrands dropped 2.6%.
Household goods makers, utilities, real estate companies and communication services stocks notched gains.
Fashion company Ralph Lauren warned that the viral outbreak cut into fourth-quarter sales by an estimated $55 million to $70 million. The stock fell 0.6%.
Alaska Air Group bucked the trend, adding 1.5% after the airline said it will cooperate more closely with American Airlines on West Coast service. The airlines asked for government permission to expand revenue-sharing to cover international flights in Seattle and Los Angeles.
Benchmark crude oil fell 5 cents to %51.37 a barrel. It rose 25 cents to settle at $51.42 a barrel. Brent crude oil, the international standard, lost 14 cents to $56.20 a barrel.
The dollar rose slightly to 109.79 Japanese yen from 109.70 yen on Thursday. The euro weakened to $1.0837 from $1.0885.
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