Stocks fall as Bank of Japan warns of ‘grave’ coronavirus concern

Edmund Heaphy
Finance and news reporter
A pedestrian walks past a stock price chart in Tokyo earlier this month. (Behrouz Mehri/AFP via Getty Images)

Asian and European stocks sunk on Friday as Bank of Japan governor Haruhiko Kuroda warned that he was watching the economic impact of the coronavirus outbreak with “grave concern.”

“Huge uncertainty remains on how the spread of the new virus may affect the Japanese economy,” Kuroda told Japan’s parliament.

“We're watching the impact with grave concern and keeping a close eye on downside risks,” he said.

Japan’s Nikkei (^N225) closed nearly 0.4% in the red on Friday in the wake of much weaker-than-expected purchasing managers’ index data from the country’s manufacturing sector.

The measure of activity fell to 47.6 in February, its weakest reading since late 2012. It means the sector has now contracted for ten months in a row.

Stocks elsewhere in Asia were also weak. The KOSPI Composite Index (^KOSPI) in South Korea, which on Friday reported a spike in coronavirus cases, fell by almost 1.5%.

The Chinese car industry, meanwhile, reported a 92% decline in car sales in the first half of February.

While China’s SSE Composite Index (^SSEC) climbed by 0.31%, the Hang Seng (^HSI) fell by more than 1% in Hong Kong on Friday.

Stocks in Europe also declined. The pan-European STOXX 600 index (^STOXX) was down by more than 0.4%, reversing marginal gains from earlier in the week.

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The FTSE 100 (^FTSE) was down by more than 0.6% in London. Germany’s DAX (^GDAXI) was down by 0.1%, while France’s CAC 40 (^FCHI) was down by 0.36%.

Meanwhile, futures are pointing to a lower opening for US stocks.

S&P 500 futures (ES=F) are down by 0.4% and Dow Jones Industrial Average futures (YM=F) are down by 0.37%. Futures on the Nasdaq (NQ=F) are down by more than 0.5%.

“A rise in new cases of the coronavirus in China, as well as South Korea, has prompted further weakness in Asia markets overnight, even as some Chinese factories restart operations after their extended shutdowns,” said Conor Hewson, chief market analyst at CMC Markets, on Friday.

 “This has prompted European markets to open slightly lower this morning as we head into the weekend and concerns that the economic effects of this infection will likely to be much more longer lasting and economically damaging than originally thought.”

China has reported more than 75,000 cases of coronavirus thus far. Some 2,236 people have died.