Virus fears keep pressure on Asian stocks but oil, Europe rebound

Kuala Lumpur, Malaysia – As the number of new coronavirus cases and deaths jumped to new highs around the world on Thursday, investors in most larger Asian stock markets headed for the exits again, sending key indices lower.

The rising death toll coupled with a grim warning from the United States government that the number of fatalities there could reach as high as 240,000, rattled investors’ nerves.

Meanwhile, oil prices surged on hopes for a US-brokered truce between Saudi Arabia and Russia, as the two top producers slug it out for a bigger slice of the world’s energy market. Those gains drove energy stocks traded in Europe, and European benchmark share indices, higher.

In Asia, India’s SENSEX stock index plunged more than 4 percent, making it the region’s worst-performing market on Thursday. New economic data showed factory activity there fell to a four-month low as the country shuts down to control the spread of the virus.

Australia’s benchmark S&P ASX 200 Index dropped nearly 2 percent, while New Zealand’s NZX 20 Index shed 0.6 percent.

Banking stocks in Australia came under pressure after neighbouring New Zealand’s central bank ordered lenders in New Zealand to suspend paying dividends to help support the country’s financial system amid coronavirus uncertainties. The move is likely to affect Australia’s top lenders operating in New Zealand, analysts say.

Japan’s Nikkei 225 fell 1.4 percent,

But mainland China’s Shanghai Composite rose 1.7 percent, while South Korea’s KOSPI Index gained 2.3 percent, as investors hoped that the worst of the outbreak may be over for those countries. Hong Kong’s Hang Seng Index gained 0.84 percent,

Most Asian stocks remain far below their multi-year highs of late February, after the record crash in global markets as the virus exploded around the world.

Ride the wild wind

“Volatility will remain elevated until we see some clarity that infection is contained. Investors are now caught up with the motion of this whole thing,” Alexander Chia, head of regional equity research at RHB Investment Bank, told Al Jazeera.

“The market is influenced by newsflow, either on infection rates or the economic data released, and whether those data came in better or worse than projection.”

But bucking the downdraft in stocks, oil prices jumped, with Brent crude surging 11.32 percent to $27.54 a barrel, while the US West Texas Intermediate soared 9.06 percent to $22.15 a barrel.

US President Donald Trump said on Wednesday he had recently spoken to the leaders of Saudi Arabia and Russia and expected a production deal to end their price war within days.

Disagreements in early March between the Saudi-led OPEC+ group of oil producers and Russia over output curbs led to the price war that crashed crude prices. The slump in demand for energy amid shutdowns of almost all non-essential business has added to the plunge.

In Europe, stocks in the United Kingdom, France and Germany gained between 0.2 percent and 0.6 percent in early trade on Thursday.

“It can be seen that a sense of fear had again descended upon the global equity market amid the continued exponential growth in COVID-19 spread on a global scale,” Jingyi Pan, market strategist at IG Asia, told Al Jazeera.

No light

“The sense is that the disruption from COVID-19 may sustain for some time, seeing the situation worsening particularly for the likes of the US and the light at the end of the tunnel being nowhere in sight.”

About 938,000 people worldwide have been sickened by the coronavirus, which has killed nearly 47,000. Some 193,000 people have recovered.

The pandemic is escalating in the West after the US overtook China in the number of reported cases. The US, Spain and the UK reported their respective highest numbers of deaths in a single day this week.

The worsening health situation has forced most governments to seal their countries’ borders while ordering schools and businesses to close their doors in an effort to combat the disease. Policymakers have poured trillions of dollars into economies worldwide to soften the blow of an imminent global recession, defined as two straight quarters of economic contraction.

“Investor sentiments in Asia are mostly dominated by concerns over the economic impact of the COVID-19 pandemic and its effects on businesses,” Thomas Yong, chief executive officer at Fortress Capital Asset Management, told Al Jazeera.

“In essence, uncertainties over [the] extent and time span of temporary business closures and operation halts.”