Asian stocks bear the burden of China virus, IMF’s growth forecast

• MSCI’s index of Asia-Pacific shares declines by 1.3%, Japan’s NIKKEI drops 0.90%.
• The outbreak of China’s coronavirus, IMF’s blame to India for the recent downbeat projection weighs on the risk tone.
• US President Donald Trump’s impeachment hearing will be the key to watch.

Following the recent run-up to a 20-month high, Asian equities slip during the pre-European session on Tuesday. The reasons to blame could be an outbreak of China’s coronavirus, which recently killed four people, as well as the International Monetary Fund’s (IMF) downgrade to the global growth forecast.

China’s human transmitted virus is likely to have reached Australia and authorities at Wuhan have taken steps to avoid further spreading. The IMF cut global growth forecast by 0.1% points in both 2019 and 2020 to 2.9% and 3.3% respectively and by 0.2% points in 2021 to 3.4% in its latest projections conveyed during the World Economic Forum (WEF) gathering in Davos. The Washington-based institute cited India as the main culprit for the action despite anticipating a recovery during 2020.

With this, the MSCI’s Asian gauge nosedive 1.3% to 702.50 whereas Japan’s NIKKEI nears 1.0% loss to 23,860. Further, Chinese stocks are marking losses ranging between 1.5% and 2.0% whereas Hong Kong’s HANG SENG has an additional reason, the fresh protests, to register a 2.6% loss by the press time.

Moving on, the US 10-year treasury yields slip below 1.80% whereas India’s BSE SENSEX trim 0.40% to 41,370. Furthermore, Australia’s ASX 200 has comparatively lesser losses, -0.20% to 7,066, as China’s Commerce Ministry recently crossed wires while welcoming the competitive US goods to Beijing.

Given the US traders’ return from the extended weekend, global markets are likely to remain active for the day in spite of a few data-points from the US. It’s worth mentioning that US President Donald Trump’s impeachment hearing will be the key to watch as the opposition members have struggled a lot to push the Republican leaders towards this day.