Coronavirus: Asian stock markets rally after ECB launches pandemic package

Asian stock markets and US futures rose slightly on Thursday following an announcement by the European Central Bank (ECB) to launch a €750 billion ($820 billion) emergency bond purchase scheme.

The ECB’s bond buyback is a quantitative easing method which includes buyback of assets of banks of EU countries, thereby boosting the country’s economic stimulus.

The US SP 500 Futures index witnessed a rise of more than 40 points, while the SP/ASX 200 of Australia rose by 2% following the ECB’s announcement. The Nikkei 225 stock market index of Japan opened on a rise of 1.7%.

Despite the positive movement, the SP 500 continues to fall overall. The index witnessed a 5% fall today, down by more than 30% over the last month.

Oil prices have also taken a hit, reaching their lowest since 2003. The current price of crude oil is $25 per barrel. Oil has also been affected by an ongoing price war between Saudi Arabia and Russia.

European market continues to nosedive

European stock markets slumped further on Wednesday, despite countries injecting billions as part of stimulus packages to counteract concerns that the coronavirus pandemic would throw the world into recession.

The pan-European Stoxx 600 saw a 4% fall at the end of closing, while Frankfurt’s DAX 30 plummeted 5.56% to 8,441.71. The Paris CAC 40 dived 5.94% and Milan slipped around 1.27%. London’s benchmark FTSE 100 index dropped 4.05% to 5,080.58 points by the end of the day.

Countries seek Massive European stimulus measures

The market slump showed that the recent series of announcements of stimulus packages from countries worldwide failed to offset coronavirus woes.

“From what we see from the market reaction, massive monetary and fiscal measures deployed are not thought to be enough to prevent economies from plunging into recession,” Swissquote Bank analyst Ipek Ozkardeskaya told French news agency AFP.

Read more: Coronavirus: What are countries doing to minimize economic damage

Germany had announced €1 billion ($1.1 billion) in credit for businesses and companies of all sizes through its state-owned KfW business development bank.

The southern state of Bavaria pledged a fund worth up to €10 billion, allowing the local government to buy stakes in faltering companies to prevent insolvencies.

Markets slump across Asia and the US

Falls in Europe on Wednesday followed losses in Asia where MSCI’s broadest index of Asia-Pacific shares outside Japan fell 3.8% to lows last seen in 2016. MSCI’s global stocks index dropped 1%.

US stock futures were as much as 4% lower and hitting their daily low limit only a day after the SP 500 jumped 6% and Dow Jones rose 5.2%.

“A rise of 1,000 in Dow is something you see only during a financial crisis. It is not a good sign,” said Nomura Securities fixed income strategist Tomoaki Shishido.

NYSE to move to all-electric trading

The New York Stock Exchange (NYSE) added to financial worries on Wednesday when it announced it would temporarily close its trading floor after two people tested positive for the coronavirus — moving instead to all-electronic trading starting on Monday.

The NYSE has suspended open-outcry trading and floor broker orders, but has vowed to remain functional despite closing its trading floor.

The Philippines temporarily suspended its stock market operations on Tuesday, becoming the first country in the world to shut its financial markets during the outbreak. Trading resumed a day later.

The price swings have left market participants reluctant to jump back into the market, reducing trading volume.

am, mvb/rs (AP, AFP, Reuters)

Article source: https://www.dw.com/en/coronavirus-asian-stock-markets-rally-after-ecb-launches-pandemic-package/a-52819515?maca=en-rss-en-all-1573-rdf