Stocks Rebound Tracking Virus Fallout

Stock markets mostly rebounded Monday, with investors assessing the economic fallout from the new coronavirus.

After Wall Street's muddled performance on Friday and with US markets closed Monday for a holiday, traders turned their attention to some grim Asian economic news.

Japan's economy suffered the worst quarterly contraction in more than five years, while Singapore cut its growth forecast for 2020 as the virus batters the city-state's tourism and trade.

Europe's largest economy Germany has reported zero growth in the last quarter of 2019, and the International Monetary Fund warned that the virus could damage global economic activity this year.

The euro on Monday hit a near three-year low at $1.0822 in Asian trading hours, before recovering.

"The European Commission is assuming 1.2 percent growth across euro-area in 2020 but markets appear to be less optimistic," said Jasper Lawler, head of research at traders LCG.

However, Eurogroup chief Mario Centeno said on Monday he thought the impact of the coronavirus on the eurozone would be "temporary".

Investors in China, comforted by a slowdown in new infections outside hardest-hit Hubei province in recent days, may be in for a rude awakening if economic data start to plunge, said Stephen Innes of AxiCorp.

"If it comes out bad enough for confidence to plummet, investors could quickly find themselves up the creek... without a paddle," he said.

"Financial markets are not known for their rational thinking lately and given the 500 million or so mainlanders affected by the (COVID-19) quarantine... it's also not hard to come up with more downside risks than upside ones right now," Innes said.

Mainland China's benchmark Shanghai Composite Index closed up 2.3 percent after the central bank announced measures aimed at cushioning the economy against the health crisis.

On Monday, the People's Bank of China offered 200 billion yuan ($29 billion) of one-year medium-term loans at a 3.15 percent interest rate, 10 basis points lower than previously.

It also added 100 billion yuan to money markets through reverse repurchase agreements.