Coronavirus News Asia

Economic reopenings revive market sentiment

Hong Kong: Investor sentiment was lifted by easing restrictions and some revival of economic activity in countries across the world despite horrific data and forecasts that capped the market upside. 

Officials in Hong Kong pledged to ease restrictions for restaurants, bars and gyms, which prompted expectations of an economic rebound after the city reported its GDP dropped by 8.9% in the first quarter of 2020 from a year ago, and retail sales fell 37% in the first quarter.

The Hong Kong benchmark, the Hang Seng index, rose 1.08% and Australia’s S&P/ASX 200 added 1.64% riding the extended rally in oil prices with Brent rising 4%.

Japan and China were shut for holidays on Tuesday.

Europe opened on a firm note with the Stoxx Europe 600 adding 1.42%. S&P Futures are up 0.79%, Dow Jones Futures are 0.85% higher and Nasdaq futures have climbed 0.88%. 

Credit markets were also firm with investors giving a solid response to new bond offerings – CK Hutchison and Bank Mandiri both getting healthy orders. The Asia IG series 33 index narrowed by 4 basis points (bps) to 119/121 bps and China moved in 3 bps to 50/52, while Australia was 5 bps tighter at 119/122 after the central bank’s less pessimistic assessment.

The Reserve Bank of Australia’s decision to hold rates at the record low level of 0.25% was widely expected but markets got a boost from a less gloomy than expected economic forecast.

“It expects GDP to fall by around 10% in the first half of the year, a touch less than our forecast of 12.5%. Across the year, the Bank expects GDP to fall by 6%, whereas we think it will plunge by 7%,” Marcel Thieliant, Senior Australia & New Zealand Economist at Capital Economics, said.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *