Australia, Korea, Japan lead Asia-Pacific rally on rising hopes lockdowns may work against the coronavirus

07-Apr-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Australia, Japan and South Korea led a rally in Asia-Pacific markets Monday, after a decline in daily deaths in hotspots in the US and elsewhere offered some hope against the raging coronavirus pandemic and sent US futures soaring.

Australia’s ASX 200 closed up 4.3 per cent, Japan’s Nikkei 225 jumped 4.2 per cent, South Korea’s Kospi advanced 3.9 per cent, and the Kosdaq increased 4.2 per cent. The Hang Seng Index rose 2.2 per cent, as of 3:23pm local time.

Meanwhile, in another boost to sentiment, Russia and Saudi Arabia “very, very close” to an oil deal, Russia’s sovereign wealth fund chief told CNBC.

“More and more people have turned optimistic, as they believe cases appear to be peaking in Europe and the US, and that OPEC and Russia are very close to a deal of a production halt,” said Alan Li, portfolio manager at Atta Capital.

“Those trends may further boost market sentiment. And people are looking at those sectors which will be benefit from the world stepping back to normal,” Li said.

Japan, the world’s third-largest economy, is reportedly preparing to declare a state of emergencyits first everand pump in huge stimulus to battle the coronavirus.

Japan’s expected move comes as the hotspots of New York, Spain and Italy showed a slowdown in daily deaths over the weekend, boosting sentiment as pharmaceutical companies around the world race to come up with effective treatments and a vaccine.

Japan’s economy was already troubled before the coronavirus outbreak, which has infected at least 3,000 Japanese citizens and killed 70. As early as Tuesday, the government may unveil its largest-ever stimulus package, with the ruling party calling for help amounting to about 60 trillion yen (US$550 billion), according to Bloomberg.

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In Hong Kong, utilities and commerce and industry led gains. New economy stocks such as Ali Health, Ping An Good Doctor and Tencent rallied. (For in-depth markets coverage, see the Live Stocks Blog.)

The city’s recovery from the economic fallout of the coronavirus pandemic may not improve in the next six months, said financial secretary Paul Chan Mo-po, adding that the government will offer “comprehensive” aid to protect businesses and jobs across all sectors as the outbreak’s impact hits the economy.

China markets are closed due to the Ching Ming Festival.

Globally, deaths due to the respiratory illness are closing in on 70,000, and about half of the world’s population is on lockdown, upending travel, business and employment. The International Monetary Fund says the global economy is in a recession, and China’s central bank warned of a possible Great Depression, although it called the possibility low.

Singapore and Hong Kong are tightening restrictions to try to curb a new wave of infections. Singapore, where 195 new cases were reported over the weekend, will shut non-essential businesses on Tuesday, followed by schools. Hong Kong reportedly is looking at stronger measures as well, after restricting travel into the city, closing bars and imposing seating distances in restaurants.

In the US, the world’s largest economy, the coming two weeks will be especially grim in terms of deaths, with the US surgeon general likening the period to Pearl Harbour and the September 11 terror attacks. But New York saw its daily deaths, hospitalisation and intubations decline, though New York Gov. Andrew Cuomo said it was too early to know whether a turning point has been reached.

“I see light at the end of the tunnel,” President Donald Trump said at a news conference. “… We have to open our country up… I hope it is going to come back quickly.”

For investors, the coronavirus continues to drive equity markets, with huge volatility in prices at times. All of the world’s major markets except in China are in bear territory.

Oil has been another wild card for investors, after Russia and Saudi Arabia launched a price war amid the virus outbreak, which depressed oil demand. Uncertainty hangs over an OPEC meeting on Thursday. Trump warned he might impose tariffs to protect the US oil industry if prices continue to collapse.

Elsewhere in markets, Singapore’s Straits Times Index rose 2.9 per cent.

Bucking the trend was New Zealand’s S&P/NZX50, which slid 1.7 per cent.

“Hundreds of people are passing away each day from the pandemic, but less so than previous days, giving markets hope that the lockdown measures are finally starting to prove effective. Like the rest of the world, financial markets are searching for any slivers of hope,” said Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA.


Category: FinanceAsia

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