Asia shares suffer virus chills, central banks offer what they can

China and Singapore become latest to add stimulus

Visitors in Tokyo, Japan. Photograph: EPA

Visitors in Tokyo, Japan. Photograph: EPA

 

Asian shares slid on Monday and oil prices took another tumble as fears mounted that the global shutdown for the coronavirus could last for months, doing untold harm to economies despite central banks’ best efforts.

“We continue to mark down 1H20 global GDP forecasts as our assessment of both the global pandemic’s reach and the damage related to necessary containment policies has increased,” said JPMorgan economist Bruce Kasman.

They now predict global GDP could fall at a 10.5 per cent annualised rate in the first half of the year.

Japan’s Nikkei slipped 3.7 per cent while MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.1 per cent. Shanghai blue chips shed 1.4 per cent.

Central banks have mounted an all-out effort to bolster activity with rate cuts and massive asset-buying campaigns, which have at least eased liquidity strains in markets.

Stimulus

China on Monday became the latest to add stimulus with a cut of 20 basis points in a key repo rate.

Singapore also eased as the city-state’s bellwether economy braced for a deep recession, while New Zealand’s central bank said it would take corporate debt as collateral for loans.

Rodrigo Catril, a senior FX strategist at NAB, said the main question for markets was whether all the stimulus would be enough to help the global economy withstand the shock.

“To answer this question, one needs to know the magnitude of the containment measures and for how long they will be implemented,” he added. “This is the big unknown and it suggests markets are likely to remain volatile until this uncertainty is resolved.”

It was not encouraging, then, that British authorities were warning lockdown measures could last months.

US president Donald Trump on Sunday extended guidelines for social restrictions to April 30th, despite earlier talking about reopening the economy for Easter.

Japan on Monday expanded its entry ban to include citizens travelling from the United States, China, South Korea and most of Europe.

Meanwhile, Oil prices were again under water as Saudi Arabia and Russia show no signs of backing down in their price war. – Reuters