Global stocks were in meltdown mode on Friday as virus anxiety conspired with worries about an imminent escalation in Syria’s Idlib, where 33 Turkish soldiers were killed in a regime airstrike, raising the specter of a full-on military confrontation between Recep Tayyip Erdogan, Bashar al-Assad and Vladimir Putin.
Coronavirus cases in Iran soared to 338, and in Italy to 650, while new cases were reported in the UK and the Netherlands.
Switzerland banned public and private gatherings of more than 1,0000 people, Japan’s northern island of Hokkaido has declared a state of emergency, Germany quarantined 1,000 people and South Korean health authorities added another 315 cases to the 256 they reported earlier in the day. Nigeria reported its first infection as did New Zealand.
Equities in Asia collapsed amid a fear-driven selloff following Wall Street’s nightmarish Thursday session. The Kospi tumbled 3.3%, falling below 2,000 and bringing its losses for the week to more than 8%, the worst weekly showing since 2011. Volatility surged.
In China, where equities had remained relatively calm amid the global malaise, shares were butchered. The CSI 300 fell 3.6% in the worst day since the re-open after the Lunar New Year earlier this month.
In Japan, the Nikkei fell 3.7%. Its losses on the week: An eye-popping 9.6%. “I don’t know how much more the market will have to fall until things calm down, that’s how it feels”, one trader with eWarrant Japan Securities told Bloomberg.
Both the Nikkei and the Topix are in correction territory. The 14-day RSI on the Topix fell to its lowest since 2015.
“[This is] reflective of a shell-shocked market, investors hoping on a wing and a prayer for a Fed response or simply short-term traders have turned off their screen and tuned out”, AxiCorp’s Stephen Innes said.
In Turkey, the Borsa Istanbul 100 Index cratered more than 10% out of the gate.
“As February draws to a close, the markets are either doing some spring cleaning, or battening down the hatches ahead of the coming storm”, SocGen’s Kit Juckes wrote. “Either way, excessively large positions are being reduced, or taken off, in both likely and unlikely places”.