Stocks Mixed as Investors Assess Stimulus Measures: Markets Wrap
Stocks traded mixed in Asia and the dollar traded near its strongest in more than three years as investors gauged the effectiveness of a rapidly strengthening set of economic and financial support measures by global policy makers.
The euro and U.S. stock futures initially advanced after the European Central Bank announced a huge boost in its efforts to stabilize the economy and capital markets. The moves reversed as optimism faded, with investors increasingly concluding nothing can avert a global recession. The yen, so often a haven amid market stress, slumped, in a sign of the extraordinary demand for greenbacks. Asian stocks ranged between gains in Japan and sharp losses in South Korea. Yields rose.
The ECB unveiled a temporary program of asset purchases worth 750 billion euros ($820 billion) to fight the impact of the coronavirus pandemic. U.S. shares earlier suffered another plunge as investor focus turned to assessing the length of the economic downturn. Oil rose to take back some of Wednesday’s 24% plunge that left prices at an 18-year low.
“The ECB is once again doing what it takes,” said Chris Rupkey, managing director for economic research at MUFG Union Bank in New York. “Government resources are unlimited when they have the central bank behind them with its money-printing capabilities that knows no limits.”
The ECB package allows the central bank to buy private and public sector securities and broadens the eligibility to cover more assets. Meantime, the U.S. Senate cleared the second major bill responding to the coronavirus pandemic and White House economic adviser Larry Kudlow said the government might take equity equity positions as part of corporate rescues. Australia is expected on Thursday to announce a quantitative easing package.
Policy makers around the world have moved in recent weeks to stem a calamitous shock to their economies, but investors have been repeatedly underwhelmed while the ensuing health crisis shows little sign of peaking any time soon.
“The outlook has changed pretty dramatically even in the last few days,” Alicia Levine, chief strategist at BNY Mellon, told Bloomberg TV. “We’re looking at a sudden stop globally, so the probability of a global recession has gone up remarkably.”
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Here are the main moves in markets:
- Japan’s Topix index was up 2.2% as of 10:15 a.m. in Tokyo.
- Futures on the S&P 500 Index were up 0.5%. The underlying index fell 5.2% on Wednesday.
- Australia’s S&P/ASX 200 Index fell 0.9%.
- South Korea’s Kospi index tumbled 3.1%.
- The yen was at 108.96 per dollar, down 0.8%.
- The offshore yuan traded at 7.0776 per dollar.
- The pound was at $1.1518, down 0.8%.
- The Aussie bought 57.96 U.S. cents.
- The euro traded at $1.0894, down 0.2%.
- The yield on 10-year Treasuries rose two basis points to 1.21%.
- Australia’s 10-year yield surged 27 basis points to 1.48%.
- West Texas Intermediate crude added 9.5% to $22.30 a barrel.
- Gold was at $1,486 an ounce.
— With assistance by Romaine Bostick, Scarlet Fu, and Joanna Ossinger
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