Asian Markets Stabilize After Monday's Sell-Off, Coronavirus Cases Cross 20K

Chinese stocks led an Asia-wide market recovery on Tuesday, as the paranoia over the markets reopening post the extended lunar holiday seemed to calm down.

What Happened

The number of confirmed cases of the novel coronavirus rose to 20,438 by the end of Monday, according to state-run Xinhua News Agency, with 425 deaths reported.

The special administrative region of Hong Kong also reported its first death from the coronavirus on Tuesday. The city closed most of its land and sea borders with mainland China by early Tuesday as protests by medical workers increased, according to the Associated Press.

Another death outside of mainland China was reported in the Philippines on Sunday.

The People's Bank of China tried to curtail fears by injecting about $174 billion in the economy through cutting reverse repo rates, but the investors didn't find solace in the measure. The benchmark Shanghai Composite index alone saw $393 billion getting wiped out from its market, plunging about 8% on Monday, as the markets traded for the first day since January 23.

The Chinese authorities have taken a number of other steps to reduce panic in the financial markets, including limiting short selling and the sale of shares by mutual fund managers, Reuters noted. The Chinese central bank-backed publication Financial News in an op-ed on Monday assured investors that the effect of the virus on the financial markets is temporary. "China's economy is bolstered by its innate resilience and lasting growth momentum that cannot be easily reversed by a virus outbreak," the article said, according to Xinhua. In a tweet late Monday, International Monetary Fund managing director Kristalina Georgieva expressed confidence that the Chinese economy "remains resilient."

Our deep sympathies to all those affected by the serious situation related to #Coronavirus. We support China's efforts to respond, including recent fiscal, monetary, and financial actions. We are confident that China's economy remains resilient.

— Kristalina Georgieva (@KGeorgieva) February 3, 2020

Meanwhile, the Reserve Bank of Australia kept its benchmark interest rate steady at 0.75%, in line with market expectations, as the officials held their first such meeting this year.

Asia Stocks

China's Shanghai Composite traded 0.67% higher at 2,765.77; Shenzhen Component added 2.94% at 10,066.82. Hong Kong's Hang Seng index was up 0.87% at 26,585.15. Japan's Nikkei 225 traded 0.48% higher, while South Korea's KOSPI was up 1.7% at 2,154.80. Singapore's Straits Times Index gained 1.33% at 3,157.23. India's SENSEX and NIFTY 50 were both up 1.84%.

US Futures

The United States futures too extended gains pointing to a higher open on Tuesday. Dow Jones futures were up 0.67% at 28,551. Nasdaq 100 futures added 0.74% at 8,181.75. S&P 500 futures traded 0.68% higher at 3,267.50.