Stocks in the Asia-Pacific region plummeted after the IMF warned that growth in the region would be stalled for the first time in six decades as a result of the coronavirus, in the latest worrying sign of devastation to the economy worldwide by the pandemic.
The gloom in the Asian markets on Thursday came after a sad day on Wall Street, where traders were faced with falling retail sales and industrial production in the United States.
At the start of the session, the Japanese benchmark Topix fell 1.2%, while Australia’s S & P / ASX 200 lost 1.8%. The Hong Kong Hang Seng index fell 0.5% as the Chinese CSI 300 index of stocks listed in Shanghai and Shenzhen fell 0.4%.
Overnight, the S&P 500 closed down 2.2% after a hectic trading session. Futures markets pulled the Wall Street index down to an additional 0.6% when trading begins later in the day.
The losses for Asian stocks follow an IMF report that predicts an “unprecedented” impact on the region’s economies, with growth slowing to almost zero this year. The IMF has estimated that Chinese GDP growth will fall to just 1.2% in 2020.
Markets have rallied in recent weeks on optimism that the rate of new Covid-19 infections may slow. But investors are once again bearish as they weigh the impact of the surge on corporate profits.
Foreign demand is now a new threat to the Chinese economy, and domestic demand is only gradually recovering
Marija Veitmane, multi-asset strategist at State Street Global Markets, said traders are “desperately looking for clues” about the depth of the damage to profits.
“While we suspect widespread disappointment, it will be difficult to compare the decline with reasonable estimates because analysts’ forecasts are extremely uncertain,” she said.
Strategists said investors were unlikely to find hope when China released its first quarter GDP figures on Friday, which will likely be the most important economic reading of the week.
The data “may not provide much optimism about a rapid recovery in the economic recovery, as external demand is now a new threat to the Chinese economy and domestic demand is only recovering gradually,” said Tai Hui, Chief Market Strategist for Asia at JPMorgan Asset Management. .
This pessimistic tinge was also evident in the currency markets. The Australian dollar, often viewed by investors as a proxy for China’s economic outlook, fell 0.5 percent to $ 0.6279 after falling 2 percent on Wednesday.
Crude oil Brent, the international benchmark for oil, added 3.3% to $ 28.61 per barrel. The 10-year US Treasury yield increased from 0.01 to 0.6473%. Yields increase with falling bond prices.