Asian markets fall on fears over economic impact of virus

Asian markets fell on Thursday with investors concerned about the economic impact from the spread of the new coronavirus as China reported more than 1,700 new infections. Airlines around the world are either suspending or paring back services in and out of China following cases of human-to-human transmission outside the country and manufacturers have also been cutting their Chinese operations.

The World Health Organisation, which initially downplayed the severity of the disease, warned all governments to be "on alert" as it weighs whether to declare a global health emergency. US Federal Reserve Chairman Jerome Powell said the coronavirus posed a new risk to growth in China and elsewhere.

In Asian stock markets, Hong Kong was down 1.4 per cent and Tokyo dropped 1.6 per cent. Japanese automaker Toyota said it would keep its plants in China closed until at least February 9 over concerns about the outbreak of the SARS-like virus which has killed 170 people and infected more than 7,700.

Taipei fell 4.9 per cent, with shares in Apple supplier Hon Hai Precision Industry plunging more than nine per cent after it said most of its manufacturing plants in China would remain closed until February 10.

The tech giant, better known as Foxconn, is the world's biggest contract electronics maker and assembles Apple's iPhones as well as gadgets for other international brands.

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The move will likely impact global supply chains for tech companies that rely on the Taiwan firm to manufacture everything from iPhones to flat-screen TVs and laptops.

Foxconn, which employs more than one million workers in China, accounts for the most US-bound exports by volume from Hubei province which is at the epicentre of the virus outbreak. Among other markets, Seoul slipped 1.3 per cent and Sydney was down 0.5 per cent.

"Equity markets remain acutely vulnerable to adverse developments in the Wuhan virus situation," said OANDA analyst Jeffrey Halley. The Fed held its policy interest rate steady on Wednesday but was on alert for possible contagion to the domestic and global economies.

"There will clearly be implications at least in the near term for Chinese output and I would guess for some of their close neighbours," Powell told reporters following the Fed's policy meeting. However, "the situation is really in its early stages and it's very uncertain about how far it will spread and what the macro-economic effects will be," he said. "We are very carefully monitoring the situation."

Oil fell following a higher-than-expected jump in US inventory, with the Brent and WTI contracts both down one per cent. 

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