Markets

Asian markets mostly down as traders fret over virus

PTI Hong Kong | Updated on April 08, 2020 Published on April 07, 2020

Most Asian equities retreated Wednesday after a two-day rally as investors closely track developments in the coronavirus crisis. At the same time, the oil market continued to fluctuate ahead of a crucial producers’ meeting.

While the deadly disease continues to sweep across the planet, signs that the rate of infections is possibly levelling out and countries are preparing to ease some lockdown restrictions have instilled a semblance of optimism this week.

However, the scale of the fight was laid bare by official data showing France’s economy suffered its worst contraction during the first three months of this year since just after World War II.

The French central bank said that in the last two weeks of March, as the coronavirus crisis deepened, economic activity plunged 32 per cent.

“Signs that the number of new daily coronavirus cases is topping out in Western Europe... is driving expectations that social distancing measures will be lifted soon,” said Stephen Innes, at AxiCorp.

“Relaxing of social distancing rules is providing the undercurrent of positivity in the markets.”

However, uncertainty about how long the crisis will last and the damage it will inflict on the global economy was keeping traders on edge and hobbling any sustainable rally.

Wall Street, where all three main indexes soared at least seven per cent at the start of the week, struggled to extend its rally and turned into negative territory Tuesday.

The losses bled into Asia, with Hong Kong losing more than one per cent, Singapore two per cent, and Sydney and Seoul each 0.9 per cent.

Shanghai ended down 0.2 per cent, while Manila and Jakarta also saw steep falls.

Tokyo, however, rose more than two per cent as Japan’s government unveiled details of a $1 trillion stimulus package, Mumbai added 0.8 per cent and Taipei piled on 1.4 per cent. Wellington also rose.

Jeffrey Halley, at OANDA, offered a warning for traders to beware any false dawn.

“A lot of good news has been built into asset markets this week on the most tenuous signs that the outbreak is peaking,” he said in a note. “Should that be proved premature the correction... could be very ugly indeed.”

He said a bear market rally should not be mistaken for the beginning of a V-shaped recovery, adding: “The best we can hope for is a U, with a W in a close second place.”

Oil prices rallied, but the commodity continues to swing as traders keenly await Thursday’s planned meeting of the world’s top producers, which will discuss a possible output cut.

The commodity has been battered by the virus as lockdowns around the world bring the global economy to a standstill and drag on demand, while a price war between Russia and Saudi Arabia has compounded the crisis.

With Riyadh and Moscow taking part, there are hopes they may draw a line under their dispute.

AxiCorp global market strategist Stephen Innes said current figures being discussed point to an output cut of 10 million barrels per day for the OPEC-led alliance -- but cautioned this might not be enough as the virus saps global demand.

“With millions of jobs and the stability of the global economy at risk, someone needs to compromise, or it will leave the industry in tatters,” he warned.

Howie Lee, an economist at Oversea-Chinese Banking Corp. said that while a cut of 10 million barrels “would lend some support to prices”, he added that US participation was vital, otherwise other producers would not be likely to take part.

Energy ministers from the Group of 20 will hold a meeting on the issue on Friday.

Investors were also keeping tabs on talks in Europe where leaders are struggling to agree on a path to supporting the region’s economy, with the EU’s 27 members unable to accept to a solidarity fund using “coronabonds“.

The Bank of France, meanwhile, said the nation’s economy contracted six per cent in January-March, putting it in recession and marking the worst performance since 1945.

Stocks in Paris opened down more than one per cent, as did London and Frankfurt.

In share trading, Australian banks were hammered in Sydney after Bank of Queensland said it would delay its dividend payments, having been urged to do so by regulators. The move, the first by a lender in the country, fuelled fears that others would follow.

Published on April 07, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.