The Nikkei, or Japanese Stock Market Index, is down 1.6% after a fall of 330 points, marking a fourth straight day of losses.
The most obvious factor affecting this is the continuing fears of the coronavirus, which is affected all Asian markets as the severity of the virus only worsens.
The current figures for the coronavirus are 72,436 cases, and 1,868 deaths. This is an increase of 98 deaths from the previous day, with 93 of those being in Hubei province, and 5 outside it. The number of cases has also increased by 1,886, most of which are also from Hubei.
However these figures are actually positive, as for the first time since January, the number of new cases per day has fallen below 2,000. This could be a sign that the measures being taken Chinese government, as well as global efforts to contain the epidemic, are working.
But regardless of this information investors are pricing in more damage done to the market as it is still unclear just how long the coronavirus will last, and just what lasting impacts it will have.
The other major factor concerning the continued drop in the Nikkei was the GDP data released yesterday from Japan, showing a decrease of 6.3% for the last quarter of 2019. These numbers are the result of the consumption tax being increased a second time, from 8 to 10%. This move was seen as baffling by economic analysts, and the decline managed to exceed their already gloomy expectations of 3.7%.
Therefore, with two consecutive quarters of falling output, compounded with the coronavirus causing hits on tourism and disrupting supply chains in auto parts and manufacturing, Japan could very well be headed towards a recession.
“The Japanese Nikkei has suffered two days of losses, amid a very poor GDP print yesterday and analysts citing fears of the Coronavirus outbreak potentially pushing the economy into a Recession. This could be an ominous sign for other key equity markets around the world and Investors will also be waiting on key Tech giants to release more information on how they foresee the virus to impact their revenues. The Nikkei now trades below a key 100 day moving average on the Daily time frame, marking a possibility to hear lower, with key support at 22,630 - lows from earlier this year.” – Anish Lal, BlackBull Markets.