A record 65 people died in China from the coronavirus on Tuesday, but that didn’t send traders flocking towards safe haven assets as they had in the earlier days of the virus. Instead, as reports surfaced that the virus is 99 percent contained within China’s borders, traders favored riskier assets, sending global stock markets surging higher, and allowing the dollar to hold its recent gains against the safe haven Japanese yen.
The yen traded near its one-week low on Wednesday afternoon in Asia, trading at 109.42 against the dollar as of 2:31 p.m. HK/SIN. The dollar index gained 0.04 percent as the greenback continued to strengthen against its primary trading partners. The Australian dollar, nursing losses since the outbreak of the virus due to its high reliance on the Chinese economy, finally managed to trade in positive territory, up 0.01 percent against the dollar to $0.6738.
Traders are remaining cautiously optimistic that the virus will be quickly contained, despite continued closures that threaten to impact the global economy. Cathay Pacific Airways announced on Tuesday that it will be cutting back 30 percent of its flights for the next two months. Casinos in Macao are virtually shuttered, with flights to the region halted and even the ferry from Hong Kong to Macao paused until further notice.
Asian stock indexes were broadly higher on Wednesday afternoon, following a day of impressive gains on Wall Street. Japan’s Nikkei 225 jumped 1.02 percent, while China’s Shenzhen Composite gained 1.6 percent. The Shanghai Composite was up 0.74 percent. Chinese benchmarks surged higher despite reports of continued air and rail closures and the shuttering of businesses and factories as people remain at home to avoid contagion. Reports out of China showed that rail trips fell 88.5 percent on Tuesday from the same period last year and that air travel was down 63.8 percent. China’s stock markets have experienced the worst sell-off in four years since the coronavirus began, but according to the Financial Times, state-backed buyers and insurance companies in China have stepped up to buy equities and support the market, bringing prices back from their lowest points.
Australia’s ASX 200 gained 0.39 percent and South Korea’s Kospi gained 0.26 despite reports that Hyundai was halting production of some of its automobiles due to a lack of parts from China. South Korea also reported two new cases of the virus on Wednesday.