Asia markets mixed, oil rallies but virus fears linger
Hong Kong: Equity markets were mixed in Asia on Thursday but the deadly coronavirus is keeping traders on edge as it sweeps the planet, with infections approaching one million and countries forced to tighten already strict lockdown measures.
Oil soared 10 percent on hopes for a US intervention to end a Saudi-Russia price war, with President Donald Trump saying he expected the two to resolve the row, while dealers were also cheered by China’s decision to enter the market.
After two weeks of much-needed gains fuelled by trillions of dollars in stimulus and widespread monetary easing, focus has returned to the devastation wrought on populations and the long-term impact of the pandemic.
Trump’s COVID-19 task force has warned the US could see almost a quarter of a million deaths and the president warned of a “horrific” couple of weeks ahead.
His sobering comments came as a number of countries said they would extend lockdowns, which have already gouged economies around the world.
Adding to the unease on trading floors was a report saying China had masked the true extent of the virus in the country, which is just coming out of an extended shutdown.
“The incremental news on the virus in the last 24 to 48 hours has been disappointing,” John Porter, at Mellon Investments Corp., told Bloomberg TV.
“The global economy has hit a wall, there’s a tremendous amount of uncertainty, and that’s contributing to the volatility in the markets and the downward trajectory we’ve seen the last few days.”
US and European markets fell around four percent Wednesday, with investors ignoring data showing far fewer private-sector jobs were lost last month than expected.
Eyes are on the release later in the day of US jobless claims figures for last week, which some estimates have put at a mind-boggling 6.5 million.
‘Ominous forecast’ –
The selling extended into Asia early on but investors managed to pare the losses, with some markets moving into positive territory.
Tokyo ended down 1.4 percent, while Sydney and Kuala Lumpur shed two percent apiece and Singapore dropped 0.2 percent. There were also losses in Wellington and Manila.
But Hong Kong rose 0.8 percent and Shanghai rallied 1.7 percent, with Seoul and Bangkok up more than two percent. Jakarta put on more than one percent, while London, Paris and Frankfurt were all on the front foot.
“With the global economy in freefall, markets have gone back to risk-off mode… as investors are struggling to look through President Trump’s ominous forecast suggesting Americans could keep dying into June,” said AxiCorp’s Stephen Innes.
“Now the markets dispute to come up with some alphabet letters to analogise a potential economic recovery. Still, it’s going to be anything but a ‘V’-shape recovery. That’s for sure.”
He added that investors were currently a “bundle of nerves”.
Crude rallied at least 10 percent after Beijing called on authorities to buy up the battered commodity to fill its reserves, helping ease supply pressure after demand fell off a cliff and producers ramped up output.
Meanwhile, Trump said he had held talks with the leaders of Russia and Saudi Arabia over their price war, adding: “I think that they will work it out over the next few days.”
The president will also meet energy industry executives on Friday to discuss the crisis, which is battering the sector, with prices now at near-two decade lows.
ANZ Bank said prices were also being supported by reports that the US energy department might rent space in the country’s emergency oil reserves to local producers.
However, Neil Wilson at Markets.com warned the jump would likely be short-lived.
“Trump always claims he is close to a deal. From what we can glean from the chatter, Russia is not raising output but the Saudis are not backing off and have increased output to record levels,” he said in a note.
“If there is a truce then oil can rally a bit but the pressure seems weighted to the downside and any supply deal will not be able to offset the collapse in demand.” – AFP