Monitoring Desk
LONDON: European stock markets and oil prices surged Tuesday and most Asian indices finished higher after Wall Street rocketed, fuelled by hopes of a concerted global response to the deadly coronavirus.
The Japanese yen, seen as a haven investment, pared back recent strong gains versus the dollar.
Pledges of action from central banks and a planned conference call between Group of Seven financial chiefs provided a much-needed boost after last week’s hammering to equities that saw major global stock markets lose around 12 percent in value.
“European stocks are following their US and Asian counterparts higher… as hopes of a global stimulus push helped lift market sentiment,” commented Joshua Mahony, senior analyst at IG trading group.
Tuesday’s positive sentiment filtered through to oil markets, where prices jumped around 3.5 percent with dealers betting on major producers cutting output to address a predicted plunge in crude demand.
On stock markets, Shanghai and Sydney closed up 0.7 percent, while Seoul put on 0.6 percent. Tokyo, however, fell 1.2 percent.
Around 1100 GMT, London’s benchmark FTSE 100 index was up 2.4 percent, around levels seen in Paris and Milan, while Frankfurt jumped 3.0 percent. Traders were given a strong lead from Wall Street’s best session in more than a year on Monday, with the Dow soaring more than five percent and the S&P 500 and Nasdaq piling on around 4.5 percent.
– Central bank action –
After last week’s 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 Tuesday on how to respond to the virus.
Ahead of the call, Australia cut borrowing costs to a record low 0.50 percent and indicated it was ready to provide more help, making it the first major economy to take such measures.
Malaysia also announced a cut on Tuesday.
The Bank of England will meanwhile “take all necessary steps” to support the UK economy from coronavirus fallout, said governor Mark Carney.
“The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove large but will ultimately be temporary,” Carney said.
The deadly outbreak has impacted economies, with an index of Chinese factory activity falling to a record low last month, while a US survey of manufacturers came in below forecast, with expectations of worse to come.
And with demand for crude tipped to take a battering — particularly from crucial consumer China — OPEC will hold an extraordinary meeting Thursday with other producers, led by Russia, to weigh its response.
The disease that began in China has killed more than 3,100 people and infected more than 91,000, though the Asian nation has reported its lowest number of new cases in six weeks.(AFP/APP)
