Asia’s stock markets were hammered on Friday (March 13) as the panic gripping world financial markets deepened and even safe-haven assets such as gold and bonds were ditched to cover losses in the wipeout.
Singapore shares plunged when trading opened after an overnight rout on mounting global recession fears. The Straits Times Index, which fell 5 per cent at the open, was down 132.28 points or 5 per cent to 2,546.36 as of 11:32am, easing a bit from a 6 per cent tumble earlier in the morning.
Other Asian markets also pared earlier hefty losses. Japan’s Nikkei was down 8 per cent by its midday break after diving as much as 10 per cent. Australia’s benchmark was down 6 per cent, pulling back from an 8 per cent loss, while South Korea’s Kospi index was down 7.6 per cent.
Hong Kong’s Hang Seng index was 5.4 per cent lower while the Shanghai Composite Index was down 3 per cent.
Thailand’s stock market, however, looked headed for another meltdown after Thursday’s 11 per cent plunge. Its SET index was down 10.6 per cent. Circuit breakers halted trading earlier after stocks fell 10 per cent.
Even after its worst crash since Black Monday in 1987 overnight, Dow futures are down about 0.8 per cent in Asia and S&P 500 futures are off 0.4 per cent.
“There is a sense of fear and panic,” said Mr James Tao, an analyst at stockbroker Commsec in Sydney, where phones at the high-value client desk rang non-stop.
“It’s one of those situations where there is so much uncertainty that no one quite knows how to respond… if it’s fight or flight, many people are choosing flight at the moment.”
Currency markets steadied somewhat after furious US dollar buying overnight, as fears of systemic risks drive demand for the world’s reserve currency.
Like many other currencies, the Singapore dollar weakened against the greenback. As of 10:15am Singapore time, the Singdollar was trading at 1.4117 to the US dollar, down 0.16 per cent from its Thursday close.
The plunge, as the coronavirus pandemic spreads, gathered pace after United States President Donald Trump spooked investors with a move to restrict travel from Europe, and after the European Central Bank disappointed markets by holding back on rate cuts.
The plunge, as the coronavirus pandemic spreads, gathered steam after US President Donald Trump spooked investors with a move to restrict travel from Europe, and after the European Central Bank disappointed markets by holding back on rate cuts.
Trade was halted on the S&P 500 after it hit downdraft circuit breakers. It fell further when trade resumed, eventually losing 9.5 per cent to close 27 per cent below February’s peak.
Gold fell 3.5 per cent, yields on long-dated US Treasuries rose amid the panic, and in the currency markets, investors stampeded into the US dollar.
“Everyone is just de-risking,” said Mr Stuart Oakley, Nomura’s global head of flow FX in Singapore.
“It’s not just a case of the stock market going down, anyone who’s long the stock market needs to chop out… It’s just a case of people wanting to bring risk back to flat,” he said.
In a televised address late on Wednesday, Mr Trump imposed restrictions on travel from Europe to the US, shocking investors and travellers.
Traders were disappointed after hoping to see broader measures to fight the spread of the virus and blunt its expected blow to economic growth.
The New York Federal Reserve pumped more liquidity to banks to try and stabilise the system as markets show signs of stress.
MSCI’s gauge of stocks across the globe shed 9.51 per cent and was down more than 20 per cent from its 52-week peak.
The VIX volatility index – Wall Street’s “fear gauge” – and an equivalent measure of volatility for the Euro Stoxx 50 hit their highest since the 2008 financial crisis.
Meanwhile, oil prices fell more than two per cent in Asian trade on Friday due to a standoff between top producers Saudi Arabia and Russia, and mounting fears the coronavirus pandemic could spark a global recession.
West Texas Intermediate was down 2.4 at under US$31 a barrel while Brent crude slipped 2.1 per cent to below US$33 a barrel, following heavy losses a day earlier.
Source: Straitstimes