Asian markets fail to shake off negative mood
HONG KONG: Asian markets were hammered yesterday despite massive economic stimulus efforts worldwide, with investors spooked by the relentless march of the coronavirus pandemic.
The negative mood was fuelled by the failure of US lawmakers to agree on a trillion-dollar emergency package to help the reeling American economy.
The global death toll from the virus has surged past 14,400, with nearly a billion people confined and non-essential businesses shut in dozens of countries and growing fears about a recession.
Wellington nosedived 7.6% as New Zealand announced a four-week lockdown to stop the spread of the coronavirus.
The Hang Seng Index in Hong Kong ended the day down 4.9%, Sydney dropped 5.6%, Shanghai shed 3.1% and Taiwan was off by 3.7%.
Singapore tanked 7.5%, Jakarta lost 3.8%, and Seoul was down 5.5%.
Tokyo was the exception, closing 2% higher as a cheaper yen against the dollar boosted Japanese markets.
The grim trend continued when European markets opened. In early trade, London tumbled 4.8%, Frankfurt lost 4.6% and Paris was down 4.4%.
Economists and analysts are now worried about how deep the impact of the pandemic could be on the global economy, with social distancing measures and lockdowns dealing serious blows to many industries. Airlines have been hit particularly hard, with isolation measures shutting down routes and grounding fleets worldwide.
Goldman Sachs, Morgan Stanley and JPMorgan Chase have all forecast a drop in
US gross domestic product, according to Bloomberg News.
“These rapid and unprecedented downgrades illustrate just how fast we’ve moved from a brief health scare to a fullblown global recession,” said Stephen Innes, global chief markets strategist at AxiCorp.
Constance Hunter, chief economist at KPMG, agreed, telling Bloomberg TV: “It’s a health crisis that’s started morphing into a financial crisis.”
US senators failed to agree on a trilliondollar proposal to rescue the American economy on Sunday, as Democrats said the Republican plan failed to provide sufficient protection to millions of workers or shore up the critically under-equipped healthcare system.
The bill proposed an estimated US$1.7 trillion or more in funding to cushion the blow from the pandemic for American families and thousands of shuttered or suffering businesses.
But President Donald Trump sounded a note of optimism: “I think that the Democrats want to get there, and... the Republicans want to get there.”
The failure is likely to extend the gloom on Wall Street, which ended in negative territory on Friday. – AFP