Asia Pacific markets declined Monday morning as government data showed Japan’s economy contracted in the previous quarter for the first time in more than a year.
Japanese shares led losses, with the benchmark Nikkei 225 down 1.34% and the Topix index off by 1.44%.
Cabinet Office data revealed the Japanese economy shrunk at an annualized pace of 6.3% in the three months that ended in December. Analysts in a Reuters poll were predicting an annual decline of 3.7%. On-quarter, GDP fell 1.6%.
Elsewhere, investors continued to assess the potential economic fallout from the pneumonia-like coronavirus that’s infected more than 68,000 people and killed over 1,600 people.
“The worrying human and economic toll of the COVID-19 outbreak is creating much uncertainty, especially as changes to the case tracking methods are making news difficult to interpret,” John Bromhead from ANZ Research wrote in a morning note.
“Markets appear to be expecting a short-lived economic impact, but they are in “wait-and-see” mode,” Bromhead said, explaining that although Chinese factories are slowly re-opening after being shut over an extended period of time after the Lunar New Year break, it will take time to clear the backlog of cargo at ports. Significant disruption is also ongoing, he added.
The virus, which was first detected in the Chinese city of Wuhan, is expected to have a significant economic impact on China as well as the global economy. Officials disclosed on Saturday that travel during the latest Lunar New Year period was a fraction of previous years amid increased travel restrictions aimed at containing the virus’ spread.
People stayed home and took advantage of refund policies that authorities enacted — China’s aviation authority said since it first announced a ticket refund policy in late January, domestic and foreign airlines have processed 20 million in tickets worth more than 20 billion yuan ($2.9 billion). The number of flights has been about a quarter of what it was last year, a representative said.
China’s railway authority said rail trips during the holiday travel period so far has been one-seventh of the 280 million it had anticipated, and that it has processed 11.5 billion yuan ($1.6 billion) in ticket refunds.
In the currency market, the U.S. dollar traded at 99.107 against a basket of currencies, off an earlier high of 99.135.
— CNBC’s Evelyn Cheng contributed to this report.