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Nikkei Markets

Asian stocks fall, tracking US futures as virus outbreak worsens

Samsung Electronics, SK Hynix among key losers on A300

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan fell Wednesday, tracking the decline in U.S. equity index futures, as investors await details of a U.S. stimulus plan to mitigate the impact of the novel coronavirus.

The Nikkei Asia300 index of companies outside Japan fell 1.1% to 1,227.52.

The loss on the gauge came amid futures indicating that U.S. equities will likely pullback after yesterday's 5% climb. The futures on the S&P 500 Index were last down 2.3%. Stock markets around the world continued to be choppy amid risks posed by the spread of the virus in Europe and the U.S. and expectations of monetary and fiscal support from countries affected by the outbreak.

In U.S., the number of cases approached 1,000 and the death toll reached 30. Italy, the epicenter of the outbreak in Europe, has more than 10,000 cases and a death toll in excess of 600. The European nation is currently under a lockdown to contain the spread of the virus.

To alleviate the economic impact of the virus, tomorrow the European Central Bank is expected to cut its key rate further into negative territory, step up quantitative easing, and deliver more LTRO (long-term refinancing operations). Meanwhile, the U.S. Federal Reserve next week is expected to reduce interest rates further, just two weeks after it cut the rates by 50 basis points,

Earlier Wednesday, the Bank of England made an emergency rate cut of 50 basis points to help the economy weather the fallout from the epidemic.

U.S. President Donald Trump has said he will propose a payroll tax cut, paid leave for hourly employees unable to work on account of the virus, loans for small businesses, and relief for sectors affected by the outbreak. France's finance minister earlier this week said that he will propose a series of fiscal measures that will constitute a massive stimulus plan.

"The outbreak has already prompted a policy response, and we expect more easing in the coming months," Morgan Stanley said in a note. "The global monetary easing cycle will be extended with the Fed delivering 75 basis points of cuts by 2Q20, while the ECB and Bank of Japan temporarily increase asset purchases. The majority of emerging market central banks will cut rates further, taking global monetary policy rates to a new all-time low. "

On the A300 gauge, Samsung Electronics tumbled 4.6% and its peer SK Hynix lost 4% to pace losses in the technology space. Taiwan Semiconductor Manufacturing ended 1.6% lower.

Cathay Pacific Airways rose 3.4%, trimming year-to-date declines. The Hong Kong-based carrier reported a 28% drop in net profit last year and said revenue slipped 3.7%.

Hong Kong-based financial real estate company Wheelock slipped 1.2% after reporting a 46% drop in 2019 net profit.

--Nimesh Vora

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