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Nikkei Markets

Asian stocks plunge as US, Europe report more coronavirus cases

Airlines drag down A300 index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan tumbled Friday as concerns grew over the economic impact of the coronavirus after more infections were reported in the U.S. and Europe.

The Nikkei Asia300 index of companies outside Japan fell 2.3% to 1,292.74.

Asian equities plunged following a drawdown of more than 3% on the S&P 500 Index overnight. Futures on the gauge suggested more losses were in store. The number of virus cases in the U.S. has increased briskly in recent days with 56 new cases reported yesterday, according to the New York Times. The nation now has more than 200 cases and 14 fatalities. Two states, California and Washington, have declared an emergency and U.S. lawmakers approved an $8 billion emergency spending bill to fight the epidemic.

In Europe, the number of cases in Italy have climbed to more than 3,800 and surpassed more than 400 in Germany and France. Italy, the most affected country outside Asia, earlier this week ordered the closure of schools and universities to contain the outbreak.

DBS Group Research said in a note that that U.S. and Europe "are under scrutiny" amid mounting infection counts and market participants will now have to begin factoring in coordinated easing by the major economies.

Traders are pricing in more easing by the Federal Reserve this month. According to the CME FedWatch Tool, there is now a near 100% probability that the Fed will cut rates by another 50 basis points later this month after having eased by a similar margin earlier this week. The European Central Bank is expected to cut rates next week.

Airlines were among the biggest losers on the A300 on Friday. Korean Air Lines tumbled 5.2%, Thai Airways International dropped 3.7%, Cathay Pacific Airways fell 3.6%, and Cebu Air shed 4.9%.

Among major losers in the technology space, Samsung Electronics, Taiwan Semiconductor Manufacturing, and Tencent Holdings dropped at least 2.3% each.

Hong Kong rail operator MTR declined 1.8% following a 25.5% drop in last year's profit as political unrest in the city had hurt operations. The company said the impact of the coronavirus on its operations will like continue for some time.

Hong Kong-shares of China Overseas Land & Investment slipped 2% following a 40% plunge in contracted sales for last month.

State Bank of India dropped 6.2%. The board of India's biggest lender yesterday provided an in-principle approval to explore investment in troubled Yes Bank after the latter was placed under moratorium amid deterioration in its financial position. Shares of Yes Bank plunged 56%.

--Nimesh Vora

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