Coronavirus: Asian markets rebound as Bank of Japan expands stimulus package
Asia’s premier markets opened strongly this morning after the Bank of Japan announced it would buy an unlimited amount of government bonds in order to protect the country’s economy from the coronavirus pandemic.
The Nikkei rose 2.8 per cent to 19,803.76, the Hang Seng picked up two per cent to 24,304.32 and the MSCI, which is weighted towards the region, grew by 2.5 per cent.
The Bank of Japan’s unprecedented steps saw it remove its previous bond-buying limit of 80 trillion yen (£600bn) to counter the ongoing economic shutdown.
It also increased capacity for purchasing corporate and commercial debt, as well as broadening the net as to what kinds of debt would qualify.
The country’s national broadcaster NHK reported that there is a growing view within the government that lifting the state of emergency as planned on 6 May will not be possible.
Later this week the Federal Reserve and the European Central Bank will also meet, with analysts watching with interest to see what new steps to ease the economic strife might be taken
Fiona Cincotta of City Index said: “Whilst the Fed is not expected to take any more action after throwing pretty much everything, including the kitchen sink at the coronavirus crisis, the ECB is expected to raise the size of its emergency bond buying package and keep pressing for sizeable fiscal stimulus”.
ANZ said that it expected the ECB to increase its emergency bond buying package by around €500bn.
After last week’s historic crash, oil prices plunged again this morning, with the price of the June delivery contract of US standard West Texas Intermediate down over 11 per cent this morning.
With demand still at cripplingly low levels, and no substantial reduction in production yet in evidence, the possibility of another price collapse remains.
Last week US crude stocks neared their all-time high water mark, currently sitting just 17m barrels below the record of 535m barrels.
Another surge in production of the same size as last week will breach the mark.
Worldwide benchmark Brent crude also fell about 4.5 per cent to $20.52, with producer cartel Opec set to begin cutting production this week.