Rally in stocks runs out of steam as coronavirus toll climbs

Hong Kong's Hang Seng fell 0.6 per cent, while the Shanghai Composite was 0.1 per cent weaker

Hong Kong's Hang Seng fell 0.6 per cent on Friday. EPA

Asian share markets slipped on Friday and oil price gains stalled, as the growing death toll and economic damage from the coronavirus outbreak put a lid on the week's sharp rally.

MSCI's index of Asia-Pacific shares outside Japan fell 0.7 per cent. Hong Kong's Hang Seng fell 0.6 per cent and the Shanghai Composite was 0.1 per cent weaker.

MSCI is global provider of equity, fixed income, hedge fund stock market indexes and multi-asset portfolio analysis tools.

"The rate of infection is not slowing," said Michael McCarthy, chief markets strategist at brokerage CMC Markets in Sydney.

"I am a little surprised at the way European and US investors have shrugged this off. I think the reaction in the Asia-Pacific region is much more reasonable. There is real uncertainty," he said.

US stocks overnight gained for a fourth straight session and Wall Street's main indexes hit record highs, while Asian assets - particularly currencies - remain under pressure.

In Asian trade, the steepest weekly slide in the Japanese yen since October has paused, leaving the currency sitting just above a two-week low at 109.93 per dollar.

US crude was firm on Friday at $51.31 per barrel, but is flat for the week and remains 13 per cent below its January 21 level. Brent prices were at $55.33 per barrel.

The toll in mainland China from the new virus rose to 636, more than doubling in just under a week, with the number of infections at 31,161.

So far, much is unknown about the coronavirus, including how deadly it is and transmission routes. The World Health Organisation has said it is too early to call a peak in the outbreak.

Yet China's aggressive response, dubbed a "people's war for epidemic prevention" by President Xi Jinping, appears to have inspired confidence.

Beijing has pumped billions of dollars into the money market to stabilise market confidence and the central bank said on Friday it expects the virus impact to be temporary.

But with deaths rising, cities shut off, flights cancelled and factories closed, global supply chains are in disarray and fears of a pandemic remain high.

Owing to much greater exposure to Chinese demand and less access to the benefits of monetary stimulus, commodity prices have been more sensitive to conditions on the ground.

Metal prices fell hard as the coronavirus outbreak gained pace and have been slow to recover.

A rally in copper - often seen as a barometer of global economic health because of its wide industrial use - ran out of steam on Thursday and closed flat in London at $5,735 per tonne.

“We think that demand could come back strongly as opposed to gradually in the second quarter of 2020,” said Commonwealth Bank commodities analyst Vivek Dhar.

“But the risk in the near term is that provinces take longer to return to work in order to contain the spread of the virus.”