Stocks across Asia-Pacific fell after the IMF warned that growth in the region would grind to a standstill for the first time in six decades due to coronavirus, in the latest ominous sign of the havoc being wrought on the global economy by the pandemic.
The gloom in Asia’s markets on Thursday came after a dismal day on Wall Street, where traders were confronted by plunging US retail sales and industrial output.
Japan’s benchmark Topix index fell 0.8 per cent, while Australia’s S&P/ASX 200 shed 0.9 per cent. Hong Kong’s Hang Seng index dropped 0.7 per cent as China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks slipped 0.1 per cent.
Overnight the S&P 500 closed 2.2 per cent lower following a choppy trading session. Futures markets tipped the Wall Street stock benchmark to rise 0.2 per cent when trading begins later in the day, while the FTSE 100 was expected to edge up 0.1 per cent.
The losses for Asian equities followed a report from the IMF that forecast an “unprecedented” hit to the region’s economies, with growth slowing to virtually zero this year. The IMF estimated that Chinese GDP growth will fall to just 1.2 per cent in 2020.
Markets have rallied in recent weeks on optimism that the rate of new Covid-19 infections could be slowing. But investors are now turning bearish again as they weigh up the impact of the outbreak on corporate earnings.
Marija Veitmane, a multi-asset class strategist at State Street Global Markets, said traders were “desperately looking for any clues” about the depths of the earnings damage.
“Whilst we suspect widespread disappointment, it will be hard to compare the decline against any reasonable estimates, as analysts’ forecasts are extremely uncertain,” she said.
Strategists said investors were unlikely to find any sources for hope when China reports its first-quarter GDP figures on Friday, in what will probably be the week’s most important economic reading.
The data “may not provide much optimism on a quick turnround in economic recovery, since external demand is now a new threat to the Chinese economy and domestic demand is recovering only gradually”, said Tai Hui, chief market strategist for Asia at JPMorgan Asset Management.
That pessimistic hue was also evident in the currency markets. The Australian dollar, often viewed by investors as a proxy for China’s economic prospects, fell 0.6 per to $0.6281, after slipping 2 per cent on Wednesday.
Brent crude, the international oil benchmark, climbed 0.5 per cent to $27.83 a barrel. The 10-year US Treasury yield fell 0.01 percentage point to 0.6298 per cent. Yields fall as bond prices rise.
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April 16, 2020 at 01:42PM
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Asia stocks fall as IMF warns of coronavirus growth standstill - Financial Times
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