Coronavirus News Asia

Asian market wrap: Investors shaken by poor earnings, volatile oil

(ATF) Hong Kong: Financial markets were off lows but investors remained nervous on Wednesday after the oil-induced collapse in equities, as the earnings season gave little by way of earnings visibility.

The Stoxx Europe 600 index was up 1% and S&P Futures were 1.2% higher.

West Texas Intermediate oil futures expiring in June fell 2.1% to $11.33 a barrel after its May contract fell deep into negative territory overnight. That weakness seeped into the Brent Futures, which fell to $17 a barrel, the lowest since 1999.

“Equity markets fell as oil prices dropped and earnings releases continue to show how difficult it is for businesses to give guidance on when and how smoothly the situation will improve,” Esty Dwek, Natixis’ Head of Macro Strategy, said.

Mexican food chain Chipotle said it was withdrawing its earnings guidance given the uncertainty surrounding the pandemic, while technology giant IBM said it will reassess its position based on the clarity of the macroeconomic recovery at the end of the second quarter, after it withdrew its guidance. 

Meanwhile, governments and central banks across the world are enacting various stimulus measures and easing policy to alleviate the economic damage from the pandemic.

The US Senate passed a $484 billion stimulus bill to replenish the small business aid program as well as pay for coronavirus testing and fund hospitals. Mexico unveiled a $31-billion package and cut its benchmark rate by 50 basis points, while South Korea plans a third supplementary budget and a $32-billion fund to support its economy.

“The global economy is furiously weak, but politicians around the world are not seating idly by,” BCA Research economists wrote in a note.

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