Shanghai stocks hit by $370 billion wipeout as virus fears pound Chinese markets

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Chinese stock and commodity markets fell heavily at the open on Monday, in the first trading session after an extended Lunar New Year break, as investors dumped risky assets in response to rising fears about the spread of a new virus across China.

The plunge wiped almost $370 billion in market capitalization from the benchmark Shanghai Composite index .SSEC, which opened nearly 9% lower.

The yuan opened at its weakest level this year and slid 1%, past the symbolic 7-per-dollar level in onshore trade CNY=.

Oil, iron ore, copper and soft commodities traded in Shanghai all posted sharp drops.

The total number of deaths in China rose to 361 as of Sunday, and the number of infections to 17 205. Deaths had stood at 17 and infections at 600 when Chinese markets last traded on January 23.

The virus has created alarm because it is spreading quickly, much about it is unknown, and authorities’ drastic response is likely to drag on global growth.

China’s central bank sent a powerful message about its intent to support the economy, with a larger than expected injection of funds into markets and a deep 10-basis-point cut to its regular reverse repos.

“It is a clear message that they want to take growth-supportive measures and keep the market reassured,” said Mayank Mishra, macro strategist at Standard Chartered Bank in Singapore.

“If you look at China ETFs in other markets a decline of around 7% was already expected…no one really knows how much worse this will get.”

Beijing has also said it would help firms that produce vital goods resume work as soon as possible, state broadcaster CCTV reported.

By mid-morning, the Shanghai Composite, which had touched a one-year low briefly, was 8% lower at 2 734.1, its lowest level since August.

Shanghai crude oil ISCCv1, Dalian iron ore DCIOCv1 and Shanghai copper SCFCv1 all fell by their daily down limits.