US equity market followed Asia’s meltdown on Tuesday and closed lower. Sentiment is expected to remain cautious as the first case of the deadly coronavirus from China is found in Washington.

This signals the possibility of a global contagion as diagnosed and suspected cases were detected in multiple regions including Japan, Korea, Singapore, New Zealand, Taiwan and Hong Kong at a rapid pace.

In China, 324 cases have been diagnosed, 162 suspected, 25 cured, and 6 have died from the novel coronavirus (2019-nCoV) as of this morning, according to official figures. Officials plan to expand screenings for the infection at major airports globally.

Sectorial performance showed clear ‘risk -off’ pattern, with real estate (+1.07%), utilities (+0.84%), consumer staples (+0.34%) and health care (+0.04%) outperforming the energy (-1.88%), industrials (-1.09%), materials (-1.07%) and financial (-0.86%) sectors.

Currency market is mixed this morning, with the dollar on the bid while offshore yuan extended losses on virus concerns. The potential economic losses and state rescue spending is likely to be enormous, which is likely to weigh on China’s already-slowing growth rate in the first quarter of 2020.

Traders will eye USD/CNH for near-term market direction of the Shanghai and Hong Kong exchange. Softening yuan signals weaker sentiment and likely to expedite capital outflow in a market that is already facing peak liquidity needs.

In Singapore, the market rebounded marginally as virus fears faded slightly, and investors came back for bargain-hunting. Real estate, telcos, consumer staples and airlines were among the better performing sectors.

USD/CNH

 


Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.