Asia Pacific Stocks’ Worst Dive
Asia Pacific Stocks are in the red on Friday amid the novel coronavirus outbreak and global panic. Investors worry whether policymakers can adequately support the current economy.
As major Asian stocks plummeted, some exchanges activated circuit breakers after Wall Street ended its longest bull market run.
The stock markets’ worst dive appears to be retreating a little bit with some markets showing signs of recovery. Dow futures were last down at 150 points or 0.7%. Moreover, S&P 500 futures fell 0.4% while Nasdaq futures plunged 1.3%.
Stephen Innes, global chief markets strategist at Axicorp, wrote a research note about Friday’s steep selloffs in Asia Pacific Stocks. He said, at least initially, it shows markets and central banks are looking to governments. China in particular is looking for fiscal solace, he added.
Innes said global supply chains are no longer just “disrupted” but are now in the process of shutting down completely.
Asia Pacific Stocks Benchmark Indexes Scaling Back a Little
Australia’s S&P/ASX 200 declined earlier in the day but reversed and began trading in green.
Japan’s Nikkei went down more than 5% in the wake of signals for a “big” spending package. According to a report, the country’s central bank plans to buy $1.90 billion worth of Japanese government bonds. The 20% drop from the most recent peak sent the benchmark index to the bear market this week.
South Korea’s Kospi scaled back losses at 5.7%, but it’s still likely to join other indexes in the bear market. In Seoul, stock trading halted temporarily due to a sharp plunge in morning trade.
Hong Kong’s Hang Seng Index dropped 3%, while Shanghai composite scaled back with 1.2% loss.
India’s indexes were also halted temporarily following sharp declines. The benchmark S&P BSE Sensex collapsed 9.4% at 29,687, and the Nifty 50 crashed 10.07% to 8,624 in early trade.
Policymakers Try to Cushion the Economy from the Crisis
Asia Pacific Stocks were hammered by coronavirus fears and Trump’s announcement of a 30-day ban on travel from European countries. The S&P 500 and all three major Wall Street indexes are now in the bear market.
Innes said major policymakers’ response including the Federal Reserve, European Central Bank, and the US governments have been insufficient. For example, European stocks suffered their worst day on record on Thursday, with the Stoxx 600 down 11%.
What spooked investors was a lack of signals on the ability or willingness to do more, he wrote.
Next week, central bank meetings will take place in Asia. Policymakers are likely going to expand stimulus measures to ease these economic pains.
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