Asian shares turn steady as markets rely on global policy stimulus
Asian shares recovered and bond yields climbed from all-time lows on Tuesday as potential organized stimulus from central banks and governments globally calmed markets.
The 10-year US Treasury yields rose to 0.68% and oil prices hiked over 6%, raising notions that the market steadied, even for a while.
Senior FX strategist Rodrigo Catril at National Australia Bank said that an organized fiscal and monetary policy is becoming more probable, especially as Donald Trump said that the US will implement major measures to underpin the economy.
Investors showed appetite for E-Mini futures for the S&P 500, which went up 2.4% after an earlier slip, while EUROSTOXX 50 futures climbed 1.7%.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%; Japan’s Nikkei increased 0.4%, but recovered from earlier lows; and Australia grew 1.9%, as investors turn to bargains in beaten-down stocks.
Wall Street was on the verge of a descending market, with major indices declining 20% from all-time peaks.
The S&P 500 dropped 7.60%, the Dow slid 7.79%, and the Nasdaq fell 7.29%.
Energy stocks suffered deepest falls as markets prepared against an oil price war between Russia and Saudi Arabia.
On Tuesday, Brent crude futures increased $2.22, at $36.58 per barrel, while US crude recovered $1.66, at $32.79.
Despite the market’s easing, updates on the coronavirus outbreak were gloomy, with the most recent news of Italy’s lockdown. The Italian government had canceled public events and had ordered everyone not to travel unless for emergencies or for work.
Economists at JPMorgan said that a 1H20 global growth contraction and global disinflationary wave is expected. They added that the Fed will most probably cut to zero at its meeting on March 18.