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Returning from a Monday holiday, the Nikkei 225 plunged 3.97% in early trade, before easing to losses of 2.98% as shares of index heavyweight Fast Retailing dropped 4.04%. The Topix index also declined 2.8%.
Shares of Fujifilm, however, surged more than 6% after local media reports that the Japanese government is considering the use of an anti-flu drug developed by a unit of the firm to treat the coronavirus.
South Korea’s Kospi was 1.01% higher, following sharp losses seen on Monday as the country witnessed a spike in the number of coronavirus cases in recent days. Seoul raised the coronavirus alert to the “highest level” over the weekend, with South Korea now the country with the most cases outside mainland China.
Consumer confidence in South Korea dropped in February to a six-month low, South Korean news agency Yonhap reported Tuesday. The Composite Consumer Sentiment Index for February fell to 96.9, declining 7.3 points from its reading in January, according to data from the Bank of Korea.
Meanwhile, shares in Australia declined as the S&P/ASX 200 fell 1.29%.
Overall, the MSCI Asia ex-Japan index was largely flat.
In China, where the outbreak was first reported, 508 new cases and 71 additional deaths were reported as of Feb. 24. That brings the country’s total to 77,658 confirmed cases, and 2,663 deaths. Outside of Asia, Italy has also seen a surge in the number of people infected, with at least 130 reported cases.
“The jump in cases outside of China raises the risk of a sharper Q1 2020 global economic slowdown,” Kim Mundy, currency strategist at Commonwealth Bank of Australia, wrote in a note. “It also raises the risk that the economic disruption is more prolonged.”
Political chaos in Malaysia
Elsewhere, markets in Malaysia were watched on Tuesday following recent developments that thrust the country into political uncertainty. The country’s Prime Minister Mahathir Mohamad unexpectedly resigned on Monday, but reportedly agreed to stay on as interim leader until a successor is named.
Following news of the political upheaval, the FTSE Bursa Malaysia KLCI Index closed about 2.69% lower on Monday. In early trade on Tuesday, the index rose about 0.2%.
The country’s central bank, Bank Negara Malaysia or BNM, said it was “closely monitoring conditions in the financial markets” after the latest political developments.
“While ringgit movements will continue to be market determined, BNM’s market operations will ensure sufficient liquidity and orderly financial market conditions,” it said in a statement.
Overnight on Wall Street, fears of coronavirus contagion sent the Dow Jones Industrial Average plunging 1,031.61 points to close at 27,960.80. The S&P 500 slipped 3.35% to end its trading day at 3,225.89 while the Nasdaq Composite closed 3.71% lower at 9,221.28.
The steep sell-off on Monday left the Dow giving up its gain for 2020, with the index now down 2% for the year. The S&P 500 also had its worst day in two years and wiped out its year-to-date gain as well.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.326 after touching highs around 99.6 yesterday.
The Japanese yen traded at 110.99 per dollar after strengthening from levels above 111.2 yesterday. The Australian dollar changed hands at $0.6615 following its decline from levels above $0.67 last week.
Oil prices edged higher in the morning of Asian trading hours, as international benchmark Brent crude futures added 0.18% to $56.40 per barrel. U.S. crude futures also gained 0.19% to $51.53 per barrel.