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Stimulus packages give markets hope

By Umesh Desai

(ATF) Trade of the Day: Stocks rebound in volatile trade; oil is higher; gold and yen are weak.

Quote of the Day: “UCLA Anderson Forecast economists say the US economy has entered a recession, ending the expansion that began in July 2009. “For the full 2020 year, it is expected that GDP will have declined by 0.4%. The revised forecast comes with an important caveat. If the pandemic is much worse than assumed, this forecast will be too optimistic.”

Stock of the Day: CanSino Biologics rose as much as 23% after the vaccine maker said it is jointly developing a vaccine candidate for preventing the disease caused by the novel coronavirus infection.   

Number of the Day: -9% – Goldman Sachs said China’s economy will likely shrink 9% in the first quarter from a previous forecast of 2.5% growth, citing “strikingly weak” economic data in January and February.

Tip of the Day: “Investors are abandoning (gold), the so-called safe-haven metal, for other reasons, including because of concerns over physical demand as Covid-19 wreaks havoc on the global economy. With the safe-haven metal not responding in the way you would expect it to in times like now, I can’t help but feel more pain is on the way for gold bugs,” said Fawad Razaqzada, independent market analyst at TradingCandles.com. He forecasts a drop below the recent low of $1,445 is imminent. He said in that case it could head to $1,350. A change in outlook could take place if it broke above $1,505.

Financial markets are set to rebound after Wall Street’s biggest fall since 1987 caused a sell-off across Asia with travel lockdowns, social isolation and distancing impacting economic activity.

The fast-spreading virus which has claimed 7,330 lives and infected over 185,000 people globally remains on top of investors’ minds as the MSCI Asia Pacific ex-Japan index fell 1.44%, weighed down by the Kospi, which dropped 2.5%.

Hong Kong’s Hang Seng index rose 0.87% and the CSI 300 index dropped 0.49%, although the Japanese benchmark Nikkei ended flat and the Australian S&P ASX 200 rose 5.8%.

But a wall of stimulus announced by various governments and central banks are giving investors hope as it has been reported that US Treasury Secretary Steve Mnuchin is pushing for a $850 billion economic stimulus.

This report emerges even as France said it will present an emergency budget on Wednesday that will include 45 billion euros ($50 billion) of spending plus 300 billion euros of loan guarantees, New Zealand unveiled a multi-billion dollar package equal to 4% of its GDP and Turkey made a 100-basis point emergency rate cut.

Still, Goldman Sachs said in a report that US stocks could plunge 20% more after falling into a bear market. Overnight, the Dow Jones Industrial Average sank 12.93%, the S&P 500 plunged 11.98%, and the Nasdaq Composite swooned 12.32%. But following the moves by authorities around the world, Wall Street is making a comeback with the S&P500 up 1% and the Nasdaq up 0.65%. The Dow Jones is flat.


Umesh Desai is Asia Times Finance Editor. Prior to his current role he was at Reuters for 19 years before which he was a credit ratings and equity research analyst. A chartered accountant by training, he is based in Hong Kong. More by Umesh Desai

Umesh Desai

Umesh Desai is the Executive Editor at Asia Financial. Prior to this he spent over two decades with Reuters News as Asia Pacific Chief Correspondent in Hong Kong and Bureau Chief in Bombay. Before becoming a journalist Umesh was a credit ratings analyst with Moody's arm in India - ICRA. A chartered accountant by training, Umesh began his career as an equity analyst. His Twitter handle is @umesh_desai


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