Global stocks and oil prices sink after grim IMF forecast
Asian shares edge lower
LONDON, April 15, (AP): Global stocks and oil prices tumbled Wednesday after the International Monetary Fund said the world’s economy will suffer its worst year since the Great Depression of the 1930s due to the coronavirus pandemic.
London and Frankfurt opened down at least 1.5% and benchmarks in Shanghai, Tokyo, Hong Kong and Sydney also declined.
Benchmark U.S. crude lost 79 cents to $19.33 per barrel in electronic trading on the New York Mercantile Exchange, dipping below $20 per barrel after an International Energy Agency report forecast that demand will drop by 9 million barrels per day in 2020, and by 29 million barrels per day in April.
The drop came despite an agreement over the weekend among OPEC and other oil producers to cut output to reflect collapsing demand. The contract fell $2.30, or 10.3%, on Tuesday to close at $20.11.
Brent crude, the standard for international oils, declined $1.60 to $28.00 per barrel in London. It dropped $2.14 the previous session to close at $29.60 a barrel.
The IMF said this year’s global economic output will shrink by 3%, a bigger loss than 2009’s 0.1% decline during the financial crisis. That was a sharp reverse from the Fund’s January forecast of 3.3% growth before the virus prompted governments to shut down factories, travel and other industries.
“The IMF forecast a deep economic winter,” said Hayaki Narita of Mizuho Bank in a report. Narita said, however, investors appear to be looking past that to the IMF’s prediction of a “springback in growth” to 5.8% next year.
The IMF’s chief economist, Gita Gopinath, said the loss to global gross domestic product, the broadest gauge of economic output, could amount to $9 trillion, or more than the economies of Germany and Japan combined.
In early trading, London’s FTSE 100 lost 1.5% to 5,706.74 and the DAX in Frankfurt declined 1.6% to 10,523.47. The CAC 40 in France retreated 1.6% to 4,449.63.
On Wall Street, the future for both the benchmark S&P 500 and the Dow industrials sank 1.8%. On Tuesday, the S&P climbed 3.1%. The index surged 12% last week but is about 16% below its February all-time high.
The Shanghai Composite Index lost 0.6% to 2,811.17 and the Nikkei 225 in Tokyo declined 0.5% to 19,550.09. Hong Kong’s Hang Seng was off 1.2% at 24,145.34.
The S&P-ASX 200 in Sydney lost 0.4% to 5,466.70 while India’s Sensex added 0.9% to 30,982.37. New Zealand advanced 2.5% while Jakarta lost 1.7% and Singapore retreated 1.3%.
Investors are focusing on how and when authorities may begin to ease
business shutdowns and limits on people’s movements imposed to slow the spread of the coronavirus.
President Donald Trump has been discussing how to roll back federal social distancing recommendations. U.S. governors are collaborating on plans to
reopen their economies in what is likely to be a gradual process to prevent the coronavirus from rebounding. The discussions follow signs the outbreak may be leveling off in some of the hardest-hit areas, including New York City.
In Italy, Spain and other places around
Europe where infections and deaths have begun stabilizing, the process of reopening economies is already underway. Some businesses and industries are being allowed to reopen in a calibrated effort to balance public health and their countries’ economic well-being.