Asian markets mostly down as traders fret over virus
Uncertainty about the crisis and damage it will inflict on global economy keeps traders on edge
Uncertainty about the crisis and damage it will inflict on global economy keeps traders on edge. PHOTO: FILE
HONG KONG:
Most Asian equities retreated on Wednesday after a two-day rally as investors closely track developments in the coronavirus crisis, while 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 the 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%.
“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 indices soared at least 7% at the start of the week, struggled to extend its rally and turned into negative territory on Tuesday.
The losses bled into Asia, with Hong Kong losing more than 1%, Singapore 2% and Sydney and Seoul each 0.9%.
Shanghai ended down 0.2%, while Bangkok, Manila and Jakarta also saw steep falls.
Tokyo, however, rose more than 2% as Japan’s government unveiled details of a $1-trillion stimulus package, and Taipei piled on 1.4%. Wellington also rose and Mumbai was flat.
Jeffrey Halley at Oanda offered a warning for traders to beware of 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 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.”
The Bank of France, meanwhile, said the nation’s economy contracted 6% in January-March, putting it in recession and marking the worst performance since 1945.
Stocks in Paris fell 1.5%, London shed 1.2% and Frankfurt dipped 0.6%.
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.
Most Asian equities retreated on Wednesday after a two-day rally as investors closely track developments in the coronavirus crisis, while 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 the 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%.
“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 indices soared at least 7% at the start of the week, struggled to extend its rally and turned into negative territory on Tuesday.
The losses bled into Asia, with Hong Kong losing more than 1%, Singapore 2% and Sydney and Seoul each 0.9%.
Shanghai ended down 0.2%, while Bangkok, Manila and Jakarta also saw steep falls.
Tokyo, however, rose more than 2% as Japan’s government unveiled details of a $1-trillion stimulus package, and Taipei piled on 1.4%. Wellington also rose and Mumbai was flat.
Jeffrey Halley at Oanda offered a warning for traders to beware of 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 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.”
The Bank of France, meanwhile, said the nation’s economy contracted 6% in January-March, putting it in recession and marking the worst performance since 1945.
Stocks in Paris fell 1.5%, London shed 1.2% and Frankfurt dipped 0.6%.
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.