Asian Shares Plummet while Japanese Market Rises on Olympic Optimism

Most major Asia-Pacific stock indexes are taking a beating on Monday with Japan’s benchmark bucking the trend with a surprisingly solid performance. The catalysts behind the selling pressure were fears over the economic impact of the coronavirus pandemic on the global economy and on investor sentiment.

In addition to the weakness in the majors, Southeast Asian stock markets also fell on Monday and Singapore marked its worst day in over 11 years as lockdowns and travel curbs to stem the spread of the coronavirus pandemic stocked fears of a likely recession.

“The economic costs of the COVID-19 outbreak are beginning to reveal themselves,” Richard Yetsenga, chief economist at ANZ, wrote in a note. “We have substantially revised our G3 growth forecasts lower, with the US likely to record its weakest performance since 1946.”

At 06:12 GMT, Japan’s Nikkei 225 Index is trading 16912.16, up 359.33 or +2.17%. Hong Kong’s Hang Seng Index is at 21822.36, down 982.72 or -4.31% and South Korea’s KOSPI Index is trading 1486.75, down 79.40 or -5.07%.

In China, the Shanghai Index is trading 2676.47, down 69.15 or -2.52% and Australia’s S&P/ASX 200 Index is at 4546.00, down 270.60 or -5.62%.

Japan’s Nikkei Rises on Optimism Olympics Likely to Only Be Postponed

Japan’s share benchmark Nikkei edged up on Monday on optimism the Tokyo Olympic Games will not be cancelled after the International Olympics Committee (IOC) said it was stepping up “scenario planning”, including possibly postponing the event, Reuters reported.

The relief over the Olympics helped Japanese shares buck the global trend. Markets in the region plummeted on recession fears on Monday as more countries around the world adopted draconian measures over the weekend to contain the spreading coronavirus.

Hopes of the Bank of Japan buying Exchange Traded Funds (ETFs) more aggressively also continued to lend support to the market.

Australian Shares Plunge Again

Australian shares have lost nearly $100 billion in a day of volatile trade after the country shut down parts of its economy and more states shut their borders. Another plunge in oil prices saw the ASX 200 energy index lose nearly 9 percent to the lowest since early 2004, as more companies cut their spending and delayed projects.

On Sunday, March 22, Prime Minister Scott Morrison declared historic measures to curb the rise of COVID-19 from within the country. Morrison ordered all pubs, clubs, churches and indoor sporting venues must close until further notice, while essential services such as grocery stores, gas stations and banks were to remain open. Australian schools will remain open for now.

Markets React to Lower US Opening

Some of the weakness in the Asia-Pacific region was attributed to the gap-lower opening in the United States after a massive funding package to combat the impact of coronavirus did not get enough votes in a key Senate procedural vote Sunday evening.

U.S. stock index futures cratered as Democrats and Republicans failed to agree on the terms of the package. The stalemate came hours after Democratic leaders warned that the bill was not to their liking because they said it did too much to bail out companies and not enough to help workers.