Asian stock markets slid Monday after China reported an uptick in new cases of its virus outbreak and analysts warned optimism the disease is under control might be premature.
Market benchmarks in Tokyo, Shanghai and Hong Kong retreated. Australia was unchanged.
A decline last week in the number of new Chinese virus cases reported daily fed investor optimism the disease and its economic impact might fade. But economists and industry analysts warn the outbreak is still weighing on retail, tourism, electronics, shipping and other fields.
Markets took the decline in daily new cases “as an early indication of containment,” said Vishnu Varathan of Mizuho Bank in a report.
“But this may well prove to be premature relief,” said Varathan. “And so, the ‘Coro-NO-virus’ relief is at best shallow, if not essentially no relief, at this point.”
The Shanghai Composite Index declined 0.5% to 2,862.35 and Tokyo’s Nikkei 225 shed 0.4% to 23,742.75. Hong Kong’s Hang Seng lost 0.9% to 27,162.84.
In South Korea, the Kospi declined 0.8% to 2,195.50 while Sydney’s S&P-ASX 200 was unchanged at 7,016.30. Markets in New Zealand, Taiwan and Southeast Asia also retreated.
China reported 3,062 new virus cases in the 24 hours through midnight Sunday. That is up 15% from Saturday’s tally in a reminder of enduring uncertainty about the disease, which has prompted authorities to cut most access to the central city of Wuhan and impose travel and other restrictions on others.
China’s central bank promised additional lending to cushion companies against the blow of intensive controls that closed shops, factories and other businesses nationwide. The government promised tax cuts and subsidies to farmers, makers of medical supplies and other companies.
Authorities are using targeted loans and government spending to fight the virus’s effects instead of a broad-based stimulus, said Iris Pang of ING in a report.
“It seems that policymakers do not want to confuse emergency policies with standard easing policies,” said Pang. “We may not see broad-based economic policy actions in the near term.”
On Wall Street, stocks snapped a four-day winning streak and fell Friday but closed out the U.S. market’s best week in eight months.
Stronger corporate earnings and hopes global central banks can support markets had helped to diffuse fears about the Chinese virus. But analysts said investors took profits Friday amid lingering uncertainty about the virus’s global impact.
The benchmark S&P 500 index retreated 0.5% to 3,327.71 and the Dow Jones Industrial Average lost 0.9% to 29,102.51. The Nasdaq composite slid 0.5% to 9,520.51.