Japanese stocks fell to four-month lows on Wednesday after a devastating day on Wall Street which saw U.S. stock benchmarks falling steeply. The Nikkei 225 eased 0.79 percent as of 3:12 p.m. HK/SIN, prompted by trader concern that the global economic slowdown will persist into Q2 thanks to a spread of the coronavirus beyond China’s borders. The index hit its lowest level since October 2019. Reuters analysts commented that the Nikkei could have fallen even further but was supported in part by stock purchases by bargain hunters who were seeking to buy on dips. The losses in Tokyo were led by the services sector as well as the mining and real estate industries. Analysts worldwide have now begun to worry that the virus will cause the cancellation of the upcoming 2020 Olympic Games which are currently scheduled to take place in Tokyo in July 2020. Stocks for companies directly related to the Olympics have already started to sell off.
Australia’s ASX 200 saw the steepest losses on Wednesday, falling 2.31 percent due to the country’s close ties to China and concerns over how the shutdowns in China will impact Australian businesses.
The dollar remained strong against most of its trading partners, with the dollar index gaining 0.15 percent on Wednesday afternoon, to trade at 99.12. The greenback saw continued strength against the Japanese yen, trading up 0.2 percent to 110.4 though still below the 111-level hit earlier this week. The greenback also gained against the Canadian dollar, up 0.07 percent to $1.329. Canada’s biggest export is oil, so it’s hardly surprising that the country’s currency falls when oil prices are lower.
U.S. WTI futures were down 0.3 percent to $9.75 per barrel, falling below the psychologically important $50 level, while Brent crude futures sunk 0.56 percent to $54.64 per barrel. The declines came after oil prices shed 4 percent on Monday on concerns that global demand will be reduced thanks to coronavirus. China’s oil demand has already been slashed by nearly 3 million barrels per day due to the closure of factories and decline in air travel. According to the Asia Times, the decline in Chinese oil demand is being dubbed the biggest shock to the oil markets since the 2008 financial crisis.