Stimulus hopes, virus containment steps lift world stocks
Expectations of more central bank stimulus lifted world stocks to their highest in more than a week on Wednesday, helping investors look past a mounting coronavirus death toll and policymakers’ concerns for the disease’s economic impact.
Already, billions of dollars pumped in by Chinese authorities to cushion the blow from the outbreak, along with stringent containment measures, have boosting mainland China indexes more than 1% and lifted Hong Kong shares.
European shares also turned around following a lacklustre open, with a pan-European benchmark up 0.6%. Wall Street futures reversed earlier losses to rise almost half a percent. MSCI’s global index rose 0.3% and was 2.3% above Monday’s six-week lows.
Traders said European stocks also rose because a Chinese TV report said a research team at Zhejiang University has found an effective drug to treat people infected with the coronavirus. Reuters has not confirmed the veracity of the report.
The report and the stimulus expectations offset at least partly the news that the virus’s death toll had killed 500 and sickened 25,000. China and other countries have imposed travel restrictions to contain the outbreak, hurting manufacturing and tourism in the world’s second-largest economy and across its global supply chains.
Those concerns were reflected in signals from the Bank of Japan and the Monetary Authority of Singapore that they were ready to ease policy. BOJ Deputy Governor Masazumi Wakatabe pledged not to rule out any option, including lowering already- negative interest rates.
The media report on the breakthrough drug also boosted some of the assets that are shunned during risk-off times. The Australian dollar hit a oneweek high and the Swedish and Norwegian currencies also strengthened.
Brent crude oil bounced 2% on the day as well, after losing 16% since the 21 January on fears the economic effects of the virus would curb demand. Crude also go support from expectations OPEC and its allies would cut output to prop up demand.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.