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Asian Shares Hammered by Plunge in Airline Stocks; Aussie Retailers Tumble as Spending Slides

By:
James Hyerczyk
Published: Mar 6, 2020, 01:56 UTC

Australian retail sales fell through the first month of the year in a bad portent for how the economy will be hit by the coronavirus outbreak.

Asian Shares Hammered by Plunge in Airline Stocks; Aussie Retailers Tumble as Spending Slides

The major Asia-Pacific stock indexes are down early in the session on Friday following another Wall Street plunge as disruptions to global business from the coronavirus beyond China worsened, stoking fears of a prolong global economic slowdown.

The flu-like virus emerged late last year in the central Chinese city of Wuhan and has since spread to more than 80 countries and claimed more than 3,000 lives. New infections have slowed in China, but there are concerns other countries are not prepared.

At 01:27 GMT, Japan’s Nikkei 225 Index is trading 20890.88, down 438.24 or -2.05%. South Korea’s KOSPI Index is at 2048.58, down 36.68 or -1.76% and Australia’s S&P/ASX 200 Index is at 6295.70, down 100.00 or -1.56%.

“Optimism overseas is fading and now people are really starting to question just how bad things will get,” said Takuya Kanda, general manager of research at Gaitame.com Research Institute in Tokyo.

Regional Airlines Take a Hit

Sharp falls in airline passenger numbers triggered by the rapid spread of the coronavirus will likely test the long-term viability of several Asian carriers already battling a long list of challenges.

Most vulnerable are those airlines which rely heavily on the Chinese market, such as Hong Kong’s Cathay Pacific Airways, Malaysia’s AirAsia Group, Singapore’s Scoot, Phillipine Airlines and Garuda Indonesia.

Shares of airlines in the region declined on Friday. Australia’s Qantas Airways dropped 4.73% while Japan’s ANA Holdings fell 2.32%. Over in South Korea, Korean Air Lines’ stock plummeted 4.98%.

Furthermore, the International Air Transport Association, an industry trade group, forecast on Thursday that airlines could lose up to $113 billion in revenue this year – the most since the financial crisis – if the coronavirus continues to spread.

“As the virus spreads more widely globally, there will not probably be a boomerang effect, where even if China is cleared, countries at the other end of Asian routes will be affected again, and this would have the effect slowing the recovery,” said CAPA’s Harbison. “An economic downturn would further accentuate that.”

Australian Retail Sales Lower Than Expected

Retail sales fell through the first month of the year in a bad portent for how the economy will be hit by the coronavirus outbreak.

The Australian Bureau of Statistics (ABS) reported sales fell by 0.3 percent nationally in January which was heavily affected initially by the summer’s fires. The coronavirus outbreak in China only became known at the end of the month. The markets had been expecting a flat month. Not only was January worse than expected but the ABS downgraded its previous report on December, saying sales that month fell by 0.7 percent.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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