Asian Markets Fall After Emergency Rate Cuts By Fed, RBNZ

Asian stock markets are sharply lower on Monday and US stock futures tumbled after the U.S. Federal Reserve, in an emergency move on Sunday, slashed its benchmark lending rate to near zero and launched a new round of quantitative easing worth $700 billion to help the U.S. economy deal with the effects of the coronavirus.

In addition, the Reserve Bank of New Zealand pared its official cash rate by 75 basis points to 0.25 percent in response to the economic implications of the coronavirus outbreak.

However, the emergency rate cuts raised concerns that the central banks’ support may not be enough to cushion the economic fallout from the COVID-19 outbreak. Weak economic data from China, including industrial production data, further dampened sentiment.

The Australian market is tumbling more than 5 percent after the emergency rate cuts by the U.S. Federal Reserve and the Reserve Bank of New Zealand. In addition, the Reserve Bank of Australia used its daily market operation to add A$5.9 billion to the banking system to ensure businesses and households have access to credit amid the coronavirus outbreak.

The benchmark S&P/ASX 200 Index is losing 281.20 points or 5.08 percent to 5,258.10, after touching a low of 5,130.00 earlier. The broader All Ordinaries Index is lower by 282.60 points or 5.05 percent to 5,308.10. Australian markets reversed early losses to close sharply higher on Friday.

In the oil space, Oil Search is falling more than 12 percent, Santos is plunging 10 percent, and Woodside Petroleum is lower by more than 6 percent even as crude oil prices rose modestly on Friday.

Gold miners are also losing after safe-haven gold prices tumbled on Friday. Newcrest Mining is falling almost 8 percent and Evolution Mining is plunging 7 percent.

In the banking space, National Australia Bank and Westpac are falling more than 6 percent each, ANZ Banking is losing more than 5 percent and Commonwealth Bank is lower by almost 4 percent.

Among the major miners, Rio Tinto is lower by 0.7 percent, while BHP and Fortescue Metals are declining 0.6 percent each.

Cochlear has withdrawn its earnings outlook and said it expects a significant decline in sales in the immediate future from the coronavirus. The hearing implants maker’s shares are losing more than 16 percent.

In the currency market, the Australian dollar is lower against the U.S. dollar on Monday. The local unit was quoted at $0.6185, down from $0.6298 on Friday.

The Japanese market is modestly higher in choppy trade after the emergency rate cuts by the U.S. Federal Reserve and the RBNZ.

The benchmark Nikkei 225 Index is adding 70.99 points or 0.41 percent to 17,502.04, after touching a low of 17,185.27 in early trades. Japanese stocks slumped on Friday amid fears of a recession due to the coronavirus outbreak.

Market heavyweight SoftBank is adding 0.4 percent and Fast Retailing is declining more than 1 percent.

In the tech space, Advantest is rising more than 2 percent and Tokyo Electron is advancing more than 1 percent.

In the oil sector, Inpex is adding 0.4 percent and Japan Petroleum is rising almost 3 percent after crude oil prices advanced on Friday.

Among the major exporters, Panasonic is lower by more than 1 percent, Mitsubishi Electric is declining almost 1 percent and Canon is down 0.2 percent, while while Sony is adding 0.7 percent.

In the auto sector, Honda Motor is declining more than 2 percent, while Toyota Motor is adding 0.2 percent.

Among the major gainers, ANA Holdings and Nippon Suisan Kaisha are gaining almost 6 percent each, Unitika is higher by almost 5 percent and FujiFilm Holdings is rising almost 5 percent.

On the flip side, JGC Holdings is losing almost 5 percent and Tokyu Fudosan is lower by almost 4 percent, while Yokohama Rubber and IHI Corp. are declining more than 3 percent each.

On the economic front, the Cabinet Office said that the total value of core machine orders in Japan was up 2.9 percent on month in January, coming in at 839.4 billion yen. That exceeded expectations for a decline of 1.0 percent following the upwardly revised 11.9 percent decline in December.

In the currency market, the U.S. dollar is trading in the 107 yen-range on Monday.

Elsewhere in Asia, New Zealand is tumbling more than 3 percent and Indonesia is losing almost 3 percent, while Singapore, Malaysia and Hong Kong are all lower by more than 2 percent each.

In addition, Taiwan is sliding almost 2 percent, South Korea is declining almost 1 percent and Shanghai is down 0.4 percent.

On Wall Street, stocks showed a substantial move back to the upside on Friday, a day after the worst drop by the Dow in over thirty years, as President Donald Trump declared the coronavirus outbreak a national emergency. The declaration by Trump would free up as much as $50 billion in additional funding to combat the outbreak and allow officials to waive certain regulations to accelerate testing and care for coronavirus patients. Adding to the positive sentiment, a coronavirus test developed by Swiss drug giant Roche has been granted emergency use authorization by the FDA.

The Dow soared 1,985.00 points or 9.4 percent to 23,185.62, the Nasdaq skyrocketed 673.00 points or 9.3 percent to 7,874.80 and the S&P 500 surged up 230.38 points or 9.3 percent to 2,711.02.

The major European markets also moved to the upside in a volatile session on Friday. While the U.K.’s FTSE 100 Index surged up by 2.5 percent, the French CAC 40 Index jumped by 1.8 percent and the German DAX Index advanced by 0.8 percent.

Crude oil futures pared most of their intraday gains and settled just modestly higher on Friday as traders weighed global crude supply position and the prospects for fresh incentives from the U.S. government to boost economic growth. WTI crude for April ended up $0.23 or about 0.7 percent at $31.73 a barrel.

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