Asian Stocks Drop Due to Fed’s Rate Cut

Asian stocks fell on Monday after the Federal Reserve cut its key interest rate to near zero as a move to cushion the blow from COVID-19.

Shanghai’s market benchmark dropped 0.5% while Tokyo gained 0.1%. Brent crude, went down 3% while gold gained.

Stock trading halted on Wall Street as futures for the benchmark S&P 500 index ES00, -4.78% dropped 5% on Sunday night.

Vishnu Varathan of Mizuho Bank said markets might have perceived the Federal Reserve’s response as panic, feeding into its own fears.

As for Asian stocks, the Topix index of Japan was 2.01% lower ending its trading day at 1,236.34. The Nikkei 225 NIK, -2.46% rose slightly as the Shanghai Composite Index SHCOMP, -3.40% retreated 0.3%. Hang Seng of Hong Kong HSI, -4.03% lost 1.8% .

In Seoul, the Kospi 180721, -3.19% was down at 0.8% while Sydney’s S&P/ASX 200 XJO, -9.70% lost 7.3%. In Taiwan, benchmark indexes were at Y9999, -4.05% . Singapore STI, -5.24% and Indonesia JAKIDX, -4.42% declined.

The Kospi 180721, -3.19% in Seoul declined 0.8% and Sydney’s S&P/ASX 200 XJO, -9.70% lost 7.3%. Benchmark indexes in Taiwan Y9999, -4.05% , Singapore STI, -5.24% and Indonesia JAKIDX, -4.42% fell.

Singapore’s Straits Times index fell 4.27% in afternoon trade while the Nifty 50 in India plummeted 5.11%.

Stocks News Elsewhere

Asian Stocks plunged along with stocks around the world. The rapid spread of coronavirus causes investors rising fears of a global slowdown.

The crude crash is getting worse. Brent crude BRNK20, -10.57% lost $1.01 to $32.84 per barrel in London. Benchmark U.S. crude CLJ20, -7.97% dropped 1.8%, or 56 cents, to $31.17 per barrel in electronic trading on the New York Mercantile Exchange.

Moreover, the Dow Jones Industrial Average DJIA, +9.36% twice dropped by more than 2,000 points. It also recorded its biggest point gain— 1,985 points on Friday. However, Dow and US stocks are set to plunge again.

The S&P 500 was down 9.8%. Trading can again be halted for 15 mins if the index drops 13% and a second circuit breaker is triggered. The Nasdaq Composite fell 11.7%.

Nate Thooft, head of global asset allocation at Manulife Investment Management said the Federal Reserve’s actions were very bold and it does appear to have spooked the markets.

According to Yung-yu Ma, chief investment strategist at BMO Wealth Management, the stock market is afraid due to the shutdowns. It is getting scared of the sobering implications of a $20 trillion dollar economy that is about to grind down.

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