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GLOBAL MARKETS-Asia shares take a breather, China cuts medium-term rates

Published 04/15/2020, 01:36 PM
Updated 04/15/2020, 01:40 PM
© Reuters.
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei, S&P futures ease after sharp rally
* China cuts medium term rates by 20 bps
* IMF flags worst global recession since 1930s
* Some U.S. states looking to gradually restart business
* Oil steadies on talk of stockpile building

By Wayne Cole and Koh Gui Qing
SYDNEY/NEW YORK, April 15 (Reuters) - Asian share markets
took a breather on Wednesday as warnings of the worst global
recession since the 1930s underlined the economic damage already
done even as some countries tried to re-open for business.
China moved again to cushion its economy, cutting a key
medium-term interest rate to record lows and paving the way for
a similar reduction in benchmark loan rates. While not unexpected, it did help MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS edge up 0.2%
to a fresh one-month top.
Shanghai blue chips .CSI300 , however, eased 0.3%. Japan's
Nikkei .N225 dipped 0.2%, though that followed a 3% jump the
previous session.
E-Mini futures for the S&P 500 ESc1 fell 0.5%, following a
3% rise in New York. EUROSTOXX 50 futures STXEc1 and FTSE
futures FFIc1 were both barely changed.
"Flattening infection curves and the thoughts of more
stimulus have lifted all boats," said Stephen Innes, chief
global market strategist at AxiCorp.
"However, appearances can be deceiving as behind the
headlines lie the most gnarly storm clouds building, suggesting
there is still much to be worried about."
Even as some U.S. states considered relaxing restrictions,
the country's death toll rose by at least 2,228, a single-day
record, according to a Reuters tally. President Donald Trump responded by saying some states could
still open shortly or even immediately. He also temporarily
halted funding to the World Health Organization, saying it
should have done more to head off the pandemic. Much economic damage has already been done, with the
International Monetary Fund predicting the world this year would
suffer its steepest downturn since the Great Depression of the
1930s. Bruce Kasman, chief economist at JPMorgan, warned such a
slowdown would take a heavy toll on corporate earnings.
"We project global profits to experience a roughly 70%
peak-to-trough decline in 2020," he wrote in a note.
"Even with a projected strong subsequent rebound, global
profits are expected to stand 20% below their forecasted
pre-pandemic level at the end of next year."
Shares of JPMorgan Chase JPM.N and Wells Fargo & Co
WFC.N both fell on Tuesday as the banks set aside billions of
dollars to cover potential loan losses from the pandemic.

BONDS STILL BID
Bond markets are still wagering on tough times ahead, along
with unlimited support from central banks and a disinflationary
pulse from lower energy prices. US/
Yields on U.S. 10-year Treasuries US10YT=RR have settled
around 0.74%, more than 100 basis points below where they
started the year.
That drop in yields combined with the vast amounts of cash
being created by the Federal Reserve has been a drag on the U.S.
dollar in recent sessions.
Currencies leveraged to global growth, including the
Australian and New Zealand dollars, have led the way higher
though the dollar has also lost ground to its major peers.
Early Wednesday, the dollar was down at 107.07 yen JPY=
having shed 0.5% overnight, while the euro firmed to $1.0980
EUR= . The dollar index =USD was near its lowest in two weeks
at 98.854.
The dollar pullback and a tide of cheap money from central
banks has burnished gold prices, with the metal hitting its
highest since late 2012. It was last at $1,724 an ounce XAU= .
GOL/
In energy markets, oil prices steadied on hopes for
purchases by consumer countries for their strategic stockpiles
on a scale not before seen. O/R
U.S. crude CLc1 was last up 32 cents at $20.43, having
shed 10% on Tuesday, while Brent crude LCOc1 edged up 16 cents
to $29.76 in erratic trade.

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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Editing by Sam Holmes)

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