BCN-01 Asian markets mostly higher but virus uncertainty casts shadow

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BCN-01

MARKETS-WORLD

Asian markets mostly higher but virus uncertainty casts shadow

HONG KONG, April 1, 2020 (BSS/AFP) – Asian markets were mostly up Wednesday
after suffering a diabolical first quarter, while traders weigh trillions of
dollars in global stimulus with the prospect of lengthy lockdowns as the
coronavirus continues its deadly sweep across the planet.

With the number of infected and dead still surging in Europe and the United
States, hopes are fading that strict containment measures keeping billions of
people at home will be lifted any time soon.

That in turn is stoking uncertainty about the outlook for the global
economy, which is widely expected to slip into recession this year, while
there are also concerns about how long any recovery will take.

Donald Trump said he was extending social distancing and stay-at-home
orders for another 30 days to the end of the month, while members of his
virus task force warned almost a quarter of a million Americans could die
from the disease.

“The demand shock for oil and for the global economy more broadly will be
more significant if mobility and social interaction restrictions stay in
place beyond April,” said AxiCorp’s Stephen Innes.

“The real question for investors isn’t how shockingly bad the first quarter
is going to be — sadly that’s a given — it’s how long the weakness will
persist and, as a consequence, how much permanent damage will be done.”

He added that “while the full effects of these disruptions are not yet
evident, it is clear that the economy is experiencing the most abrupt and
severe contraction since the Great Depression”.

And Rodrigo Catril, of National Australia Bank, said in a note: “Overall,
there seems to be an increasing risk that markets are underestimating the
length containment measures will be implemented across the globe. China and
now Italy are also showing that the removal of these containment measures
will be slow.”

Still, there has been a little good news, with fresh data Wednesday showing
another surprise return to growth in China’s factory sector. The Caixin
purchasing managers index last month came in slightly above the 50 mark that
separates growth from contraction, having hit a record low in February.

The figure came a day after an official reading that also came in well
above forecasts, providing hope the world’s number two economy is slowly
grinding back to work after a long lockdown.

– Saudis ‘digging in’ –

In early trade Shanghai edged up 0.1 percent and Sydney rallied more than
three percent, with Seoul flat. Taipei added 0.2 percent, Manila gained 0.8
percent and Wellington one percent.

However, Tokyo went into the break down 0.9 percent after a closely watched
survey by the Bank of Japan showed confidence among the country’s major
businesses had fallen into negative territory for the first time since 2013.

Hong Kong lost 0.6 percent, with HSBC plunging more than six percent after
scrapping its dividend and warning of a severe impact to revenues.

While there remains a lot of uncertainty on markets, and further turmoil is
forecast, the past week has seen some stability return to trading floors,
thanks to the massive stimulus pledges. Most indexes across the planet lost
around a fifth of their value over the past three months.

Oil was flat, as Saudi Arabia began ramping up output of the black gold as
it presses on with a price war with Russia. However, there was some support
after Trump said the two would hold talks, as he frets over the hit to US
energy firms from the plunge in the crude market.

“They’re going to get together and we’re all going to get together and
we’re going to see what we can do,” Trump said. “Because you don’t want to
lose an industry. You’re going to lose an industry over it.”

However, Innes added that the Saudi decision to boost output “is yet
another signal that Saudi is digging in. The risk remains skewed to the
downside for oil until this changes, and/or COVID-19 news flow turns
positive”.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.9 percent at 18,739.98 (break)

Hong Kong – Hang Seng: DOWN 0.6 percent at 23,471.86

Shanghai – Composite: UP 0.1 percent at 2,754.27

Brent North Sea crude: DOWN 0.1 percent at $22.74 per barrel

West Texas Intermediate: UP 0.1 percent at $20.49 per barrel

Euro/dollar: DOWN at $1.1010 from $1.1037 at 2130 GMT

Dollar/yen: UP at 107.80 yen from 107.63 yen

Pound/dollar: DOWN at $1.2370 from $1.2420

Euro/pound: UP at 89.00 pence from 88.82 pence

New York – Dow: DOWN 1.8 percent at 21,917.16 (close)

London – FTSE 100: FTSE 100: UP 2.0 percent at 5,671.96 (close)

BSS/AFP/GMR/0936 hrs