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GLOBAL MARKETS-Stock rebound stalls as doubts about U.S. virus response grow

Published 03/11/2020, 08:50 AM
Updated 03/11/2020, 08:56 AM
GLOBAL MARKETS-Stock rebound stalls as doubts about U.S. virus response grow
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Tracking the coronavirus: https://tmsnrt.rs/3aIRuz7
* Lack of details about Trump stimulus unsettles markets
* Policymakers struggle to stay ahead of coronavirus
* Oil futures resume decline after Monday's collapse

By Stanley White
TOKYO, March 11 (Reuters) - Asian shares and Wall Street
futures fell on Wednesday as growing scepticism about
Washington's stimulus package to fight the coronavirus outbreak
knocked the steam out of an earlier rally.
Markets had been recovering from a brutal global selloff on
Monday that was triggered by the double shock of an oil price
crash and the worsening outbreak.
Those gains looked short-lived in early Asian trade, with
U.S. stock futures ESc1 falling 1.54% and MSCI's broadest
index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down
0.04%. Australian shares .AXJO were down 1.31%. Japan's Nikkei
index .N225 erased early losses to rise 0.24%.
Earlier this week, U.S. President Donald Trump said he would
take "major steps" to ease economic strains caused by the spread
of the flu-like virus. Headlines focused on discussions of
payroll tax cut, which helped lift market sentiment.
However, the lack of major announcements since then has left
some investors unimpressed.
"We were promised something substantive from the Trump
administration, and if it hasn't come yet at this hour, then it
looks like it is being delayed," said Michael McCarthy, chief
market strategist at CMC Markets in Sydney.
"That's why markets have a negative tone. From a global
investor's perspective, there are still a lot of downside
risks."
On Wall Street all three major indexes jumped nearly 5% on
Tuesday, one day after U.S. equities markets suffered their
biggest one-day losses since the 2008 financial crisis.
The dollar gave up gains and fell against the yen JPY=EBS ,
the Swiss franc CHF=EBS and the euro EUR=EBS as uncertainty
set in.
Benchmark U.S. 10-year Treasury yields US10T=RR were last
at 0.7603%, more than double Monday's record low yield of
0.3180%.
Further gains in yields could be limited because there are
still strong expectations that the U.S. Federal Reserve and
other central banks will support fiscal stimulus with monetary
easing.
Market participants largely expect the Fed to cut interest
rates for the second time this month at the conclusion of next
week's regularly scheduled policy meeting after surprising
investors last week with 50 basis point rate cut. FEDWATCH
The euro is also in focus before a European Central Bank
meeting on Thursday, where policymakers will face pressure to
ease policy after Italy put its entire country on lockdown in an
attempt to slow new coronavirus infections.
U.S. crude CLc1 fell 0.52% to $34.18 a barrel, dashing
hopes that the market could stabilise.
On Monday the oil market collapsed and futures saw their
largest percentage drop since 1991 Gulf War as a price war
between Saudi Arabia and Russia broke out. Many analysts say investors need to remain on guard for
further market volatility, because the coronavirus still poses a
risk to public health in many countries, which could place
additional strain on the global economy.
The virus emerged late last year in the central Chinese
province of Hubei but has since spread rapidly outside of China,
leading to more than 4,000 deaths.
Restrictions on movement and factory closures aimed at
stopping the epidemic are putting the brakes on global economic
activity.


(Editing by Sam Holmes)

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