As the death toll reached 106 in China, some health experts questioned whether Beijing can contain the virus which has spread to more than 10 countries, including France, Japan and the United States. No deaths have been reported outside of China so far. China has already extended the Lunar New Year holiday to Feb. 2 nationally, and to Feb. 9 for Shanghai. On Tuesday, the country's largest steel making city in northern Hebei province, Tangshan, suspended all public transit in an effort to prevent the spread of the virus.
The economic impact will depend on how successfully this outbreak is contained.
Asian stocks extended a global selloff as China took more drastic steps to combat a deadly new corona-virus.
Bonds shone on expectations central banks would need to keep stimulus flowing to offset the likely economic drag.
Chinese markets shut investors were selling the offshore yuan and the Australian dollar as a proxy for risk.
Oil was also under pressure as fears about the wider fallout from the virus mounted. Brent crude was off 27 cents at $59.05 while U.S. crude eased 22 cents to $52.92.
Travel and tourism would be the hardest-hit sectors together with retail and liquor sales though healthcare and online shopping were seen as likely out performers.
On Monday, British, French and German equity markets slid more than 2%, as did pan-European markets on worries about the potential economic impact from the deadly virus. Stocks on Wall Street fell more than 1%.
Treasury 10-year note yields dived as deep as 1.598% on Monday, the lowest since Oct. 10. Yields on two-year paper also fell sharply while Fed fund futures rallied as investors priced in more risk of a rate cut later this year.
Australian and New Zealand bonds gained on Tuesday as did Japanese government bonds with yields on 10-year JGBs set for their fourth straight day of losses.
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