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Nikkei Markets

Asian stocks decline as Trump extends US curbs to check virus outbreak

Bank of China, ZTE among losers on A300 index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan fell Monday after a surge in the number of coronavirus infections in the U.S. prompted President Donald Trump to extend social distancing guidelines.

The Nikkei Asia300 index fell 1.7% to 1,092.07.

After last week's rebound, Asian equities were back to their losing ways after Trump extended the social distancing guidelines through the end of April. The guidelines require Americans not to undertake non-essential travel, avoid gatherings of more than 10 people, and not to eat at restaurants and bars.

The extension was a climb down from the president's earlier position that he wanted to open up the country by Easter.

Trump's hand was forced by the surge in the number of cases in the U.S. to over 140,000, almost double of the tally just about a week back. The country now has more than 140,000 cases from less than 10,000 a couple of weeks ago while the death toll in the nation has reached about 2,500.

U.S. equities dropped on Friday, but were higher for the week. Additional measures by the Federal Reserve and a $2 trillion fiscal stimulus had helped the stocks post weekly gains.

Despite last week's rebound, Goldman Sachs said that "tactically," it believes the markets will turn lower in the coming weeks.

"A three-part checklist (is needed) for a sustained rally: (1) Slowing viral spread; (2) Evidence that fiscal and monetary policy stimulus is working; and (3) A bottoming in investor positioning and flows," it said.

Meanwhile, central banks in Asia continued to take steps to mitigate the economic impact of the outbreak. The People's Bank of China lowered its 7-day reverse repo rate, the rate at which it provides short-term liquidity to banks, to 2.20% from 2.40%. The Monetary Authority of Singapore signaled Monday it will allow the Singapore dollar to remain at its current level compared with the currencies of its trading partners in what amounted to a de-facto loosening of monetary policy.

In movers on the A300, Hong Kong shares of Bank of China declined 1% following a 4.1% increase in net profit and 4% gain in net interest income.

ZTE fell 2.5% despite the Chinese telecom operator swinging to a net profit last year.

Singapore-based transport operator ComfortDelGro dropped 4.5% after saying on Monday that it will extend the daily rental relief till September to help its cabbies affected by the virus outbreak, a move which will effectively push its taxi unit into a loss in 2020.

--Nimesh Vora

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