Equities mostly rise but Japan skids on stark economic data

Wall Street closed for Presidents’ Day

People walk past a bank electronic board showing the Hong Kong share index at Hong Kong Stock Exchange on Feb 17. Markets are mixed in Asia, with

Japan’s benchmark slipping 0.8% after the government reported the economy contracted in the last quarter. (AP)

BANGKOK, Feb 17, (AP): Global stocks mostly rose Monday, with Shanghai’s benchmark jumping over 2% after the central bank rolled out support for the economy amid a virus outbreak that has infected over 71,000 people globally. Japan’s market slumped, however, on weak economic growth figures.

Britain’s FTSE 100 gained 0.3% to 7,431, while France’s CAC 40 was 0.2% higher at 6,084. Germany’s DAX added 0.2% to 13,775. Wall Street was set to remain closed for Presidents’ Day. Futures for the S&P 500 and the Dow Jones Industrial Average edged 0.2% higher in electronic trading.

The Shanghai Composite index jumped 2.3% to 2,983.62 after the central bank and government announced a slew of measures to support the economy as the country battles an outbreak of a new virus that has killed 1,774 people.

The People’s Bank of China cut its one-year medium-term lending rate to 3.15% from 3.25%. It also injected some 300 billion yuan ($43 billion) into the markets through short-term purchases of securities and other injections of cash.

Such moves will likely be followed by more, said Julian Evans-Pritchard of Capital Economics, given that many of the companies worst affected by the virus outbreak are smaller ones that lack access to loans from major state-run banks.

The government has also announced plans for tax cuts and other measures to help companies struggling with shutdowns of cities and plunging consumer spending and travel.

“We think the People’s Bank of China will need to expand its re-lending quotas and relax constraints on shadow banking in order to direct more credit to struggling (small- and medium-sized companies),” Evans-Pritchard said in a commentary.

The Nikkei 225 index in Tokyo skidded 0.7%, to 23,523.24 after the government reported the economy contracted 6.3% in annual terms in the last quarter.

Analysts said the contraction in the

Japanese economy, the world’s thirdlargest, reflected the impact of typhoons, trade tensions and crimped consumer spending after the sales tax rose to 10% from 8% as of Oct 1. The seasonally adjusted economic data was announced as Prime Minister Shinzo Abe faces pressure over spreading cases of the new viral illness COVID-19 and markets around the region see a mounting toll from its impact on travel and tourism as authorities strive to contain it.

“Consumer spending, which slumped following the tax hike in the fourth quarter of 2019, will now struggle to do anything except contract further in the first quarter as the impact of Covid-19 weighs on consumer sentiment, weighing in particular on the consumer services sector,” analysts at ING bank wrote in a report to investors.

“Some further government spending may help to curb any further contraction in GDP beyond (the first quarter of 2020). But that will not stop what started off as a technical downturn from evolving into a full-blown recession,” they said.

Elsewhere in the region, Sydney’s S&P ASX/200 edged 1% lower to 7,125.10. South Korea’s Kospi fell 0.1% to 2,242.17, while the Hang Seng in Hong Kong climbed 0.5% to 27,959.60. India’s Sensex shed 0.4% to 41,082.82.

In currency markets, the dollar rose to 109.90 Japanese yen from 109.77 yen on Friday. The euro edged down to $1.0833 from $1.0839.

Wall Street closed out a wobbly session Friday with the major stock indexes notching their second straight weekly gain. Trading was mostly subdued and cautious following China’s report Thursday of a surge in cases of a new virus that raised fresh concerns about global economic growth.

The S&P 500 index rose 0.2% to 3,380.16. The Nasdaq composite gained 0.2%, to 9,731.18. Both indexes were lower for most of the afternoon. The Dow dropped 0.1%, to 29,398.08. The Russell 2000 index slid 0.4%, to 1,687.58.

Bond prices rose. The yield on the 10-year Treasury was at 1.59% from 1.58% late Friday.

Benchmark U.S. crude oil picked up 2 cents to $52.07 per barrel in electronic trading on the New York Mercantile Exchange. It closed 1.2% higher on Friday, notching its first weekly gain in six weeks. Brent crude oil, the international standard, lost 6 cents to $57.26 a barrel.