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Nikkei Markets

Asian stocks slump again as pandemic worsens amid rising deaths

Coronavirus fears eclipse Fed's second emergency rate cut

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan fell Monday as rising coronavirus infections and deaths in the U.S. and Europe eclipsed another emergency rate cut by the Federal Reserve.

The Nikkei Asia300 index of companies outside Japan fell 5.1% to 1,099.30.

The Fed cut rates by 100 basis points on Sunday to take its key rate to near zero, saying the virus outbreak had disrupted economic activity in many countries, including the U.S., and affected global financial conditions significantly. The central bank additionally decided to resume asset purchases, involving increasing its holding of Treasury securities of at least $500 billion and of agency mortgage-backed securities by at least $200 billion.

The second inter-meeting rate cut by the Fed in less than two weeks comes in the wake of increasing volatility in global fixed income, equity, and foreign exchange markets on account of the pandemic. The rapid rise in the number of cases in Europe and the U.S. has prompted an exodus from risk assets.

Italy yesterday reported the biggest single-day jump in the number of new cases. Spain followed Italy in ordering a lockdown while France instructed closure of cafes and restaurants. Germany closed its borders with neighboring countries. In the U.S., the number of cases has jumped to near 3,500 from less than 100 in just over two weeks. The U.S. Centers for Disease Control and Prevention recommended a ban on gatherings of 50 people or more for the next eight weeks.

Meanwhile, the New Zealand central bank cut rates by 75 basis points on Monday and said the next step would be asset purchases.

China's central bank late Friday announced a targeted reserve-ratio cut. Data released on Monday showed the country's industrial output fell 13.5% in January and February from a year ago. Analysts polled by Reuters were expecting a rise of 1.5%. Meanwhile, retail sales during the period contracted 20.5%, down from a growth of 8% recorded in December. Analysts polled by Reuters were expecting a rise of 0.8% for the period.

In major movers on the A300 on Monday, Hong Kong shares of Chinese telecommunications equipment maker ZTE tumbled 23.2%. The U.S. Department of Justice is investigating the company for alleged bribery, according to NBC News. The company said it had not received any notices regarding the matter from the U.S.

Ping An Insurance Group fell 3.6% after saying gross premium income at its life insurance and health insurance businesses for the January-to-February period fell 11.8% from a year earlier.

Tencent Holdings dropped 6.4% and Taiwan Semiconductor Manufacturing lost 4.7%. The two shares are among the highest weighted on the A300 gauge.

Industrial commodity producers extended losses amid the weak China data and worsening growth outlook. South Korea's POSCO dropped 5.3%, India's Tata Steel lost 11%, and zinc miner Vedanta tumbled 10.6%.

--Nimesh Vora

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