U.S. Stock Futures Drop as Virus Spreads; Yen Up: Markets Wrap

(Bloomberg) — Asian shares fell along with U.S. stock futures while haven assets nudged higher at the start of a week that may prove crucial in determining the trajectory of coronavirus cases, and in turn the prospects for a v-shaped economic recovery.

Equities opened lower in South Korea, Japan and Australia, while futures on the S&P 500 Index declined about 0.5%. With cases outside of China continuing to increase, investors will be monitoring whether the rate of change kicks up a gear. Treasury yields dipped, extending losses seen on Friday. The yen and gold advanced. The yuan traded weaker than 7 per dollar offshore. West Texas crude fell below $50 a barrel.

© Bloomberg Emerging-market currencies tumble as virus concern returns

As investors grapple with assessing the impact of the virus on global growth, China’s central bank on Monday will offer its first batch of special re-lending funds as it seeks to combat the outbreak. Companies have limited their operations in China and the Nikkei newspaper reported Hon Hai Precision Indistry Co., Apple Inc.’s main iPhone production partner, dropped plans to resume production after Chinese authorities intervened.

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“This coronavirus seems to be going on for longer, is infecting more people and the hit to growth will be longer,” Diana Mousina, an economist at AMP Capital Investors Ltd., told Bloomberg TV in Sydney. “You won’t be able to recoup all of the negative impacts in the first quarter.”

Here are some key events coming up:

China inflation data comes Monday. Producer prices probably were flat in January from a year ago, according to forecasts, after six months of declines.Earnings season continues with reports including: Alibaba, Softbank, Nissan, Airbus, Nestle and AIG.Federal Reserve Chairman Jerome Powell delivers his semiannual testimony in Congress on Tuesday and Wednesday.Thursday brings a gauge of underlying U.S. inflation, the core consumer price index. It’s expected to increase to 0.2% in January, a faster pace than in December.China and the U.S. on Friday lower tariffs on billions of dollars of respective imports, as part of the trade deal signed last month.

And these are the main moves in markets:

Stocks

Futures on the S&P 500 lost 0.5% as of 9:03 a.m. in Tokyo. The underlying gauge fell 0.5% on Friday.Japan’s Topix index dropped 0.8%.South Korea’s Kospi index retreated 1.2%.Australia’s S&P/ASX 200 Index slid 0.5%.

Currencies

The yen rose 0.1% to 109.66 per dollar.The offshore yuan was steady at 7.0089 per dollar.The euro bought $1.0948, little changed.

Bonds

The yield on 10-year Treasuries fell two basis points to 1.56%. Australia’s 10-year yield declined seven basis points to 0.97%.

Commodities

West Texas Intermediate crude oil fell 1% to $49.86 a barrel.Gold rose 0.2% to $1,574.14 an ounce.

–With assistance from Sydney Maki.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Joanna Ossinger

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