Asia markets mostly up as central banks prepare virus response
AFP, Hong Kong
Most Asian markets rose for a second day yesterday following a blockbuster surge on Wall Street fuelled by hopes for a concerted global response to the coronavirus.
Pledges of action from central banks around the world and a planned conference call between Group of Seven financial chiefs provided a much-needed boost
to markets after last weeks hammering.
The positive sentiment filtered through to oil markets, where dealers are betting on major producers cutting output to address tumbling demand.
However, earlier gains were pared as investors fret over the effectiveness of monetary policy in the face of the virus, which continues to spread, with the US death toll jumping and the World Health Organization warning the world was in uncharted territory.
The disease has now killed more than 3,100 people and infected more than 91,000, though China where it started yesterday reported its lowest number of new cases in six weeks.
Shanghai and Sydney both rose 0.7 per cent, while Seoul put on 0.6 per cent.
Singapore and Mumbai edged up 0.3 per cent, with Taipei and Manila gaining more than one per cent, and Wellington, Bangkok and Jakarta more than two per cent.
Tokyo, however, fell 1.2 per cent, and Hong Kong was marginally lower.
In early trade, London and Paris each rose 1.5 per cent, while Frankfurt added 1.4 per cent.
One feels... that the newly found optimism sweeping the markets has a fragile foundation, said Jeffrey Halley at OANDA. We have not seen the end of peak gyration in markets yet.
Traders were given a strong lead after Wall Street enjoyed its best day in more than a year as the Dow soared more than five per cent, while the SP 500 and Nasdaq piled on around 4.5 per cent.
After last weeks rout, investors returned to buying as central banks from the US, Japan and Europe said they were ready to provide support with monetary easing such as interest rate cuts and cash injections to financial markets.
The US Treasury also announced that Secretary Steven Mnuchin
and Federal Reserve chief Jerome Powell will lead a conference call with their G7 counterparts later Tuesday on how to respond to the virus.
Yesterday, Australia cut borrowing costs to a record low and indicated it is ready to provide more help, making it the first major economy to take such measures.
Donald Trump jumped on the cut, using it to attack the Federal Reserve and renew his call for a similar move at home, saying: Jerome Powell led Federal Reserve has called it wrong from day one. Sad!
Malaysia also announced a cut on yesterday.
Stephen Innes said the conference call was a good sign of potential action to come and should bring some stability to markets.
And it would suggest were moving beyond verbal intervention, as global policymakers want to get in front of the viruss economic carnage through the framework of policy action.
He added that central banks had the power to stop massive sell-offs such as last weeks but the policy shock and awe impulse needs to be delivered quickly to have the highest market impact.
Still, National Australia Bank analyst Ray Attrill warned about how far such action could help during this crisis.
An impending round of fresh central bank easing is not going to make COVID-19 go away, he said.
