US, WASHINGTON (ORDO NEWS) — The dollar jumped, and most of the remaining assets fell on Thursday, as emergency measures by central banks in Europe, the US and Australia could not stop the fresh wave of panic sales.
“There are no customers, there is little liquidity, and everyone just leaves,” said Chris Weston from Pepperstone brokerage in Melbourne. Stocks, bonds, gold and raw materials fell amid attempts by the world to contain the coronavirus, while investors and companies turned to cash.
US stock futures were approaching the fall limit, but then recovered during volatile trading. The Australian dollar fell 4% to a low of more than 17 years.
Almost every Asian stock market saw a downturn, and in Seoul, Jakarta and Manila, trading was automatically halted.
The MSCI Asia-Pacific stock index excluding Japan fell 5% to a four-year low, with South Korea and Hong Kong leading the losses.
Yields on 10-year government bonds in Australia, New Zealand, Malaysia, Korea, Singapore and Thailand increased as prices fell. Gold became cheaper by 1%.
The Nikkei Index lost about 1%, Australian shares – about 3%, South Korean KOSPI – 8%, and Hong Kong Hang Seng – 5%.
Meanwhile, the outbreak of the virus is intensifying. Italy on Wednesday reported a maximum increase in coronavirus deaths per day since the outbreak in China at the end of 2019.
As the pandemic continues to spread outside of China, an increasing number of countries are preparing for the worst-case scenario in which the outbreak ends no earlier than next year.
JP Morgan economists predict that the US economy will shrink by 14% in the next quarter and the Chinese economy by more than 40% in the current quarter, which is one of the worst signals about the magnitude of the consequences of the epidemic.
“There is no longer any doubt that the longest expansion of the economy in history will end this quarter,” the bank’s analyst note said. “The key issue in the forecast now is determining the depth and duration of the 2020 recession.”
Investors will analyze the data on the number of applications for unemployment benefits in the United States, which will be published at 12.30 UTC.
The European Central Bank at an emergency meeting on Wednesday tried to stabilize the situation by announcing a new bond purchase program worth 750 billion euros.
The US Federal Reserve launched the third in two days emergency lending program to deal with the effects of the viral crisis. The new program aims to support the operation of $ 3.8 trillion of money market mutual funds in case investors quickly withdraw funds.
The Reserve Bank of Australia (RBA) lowered interest rates for the second time this month, joining global central banks to help the economy amid the expanding effects of the coronavirus pandemic.
But, as in the case of the previous large-scale incentive measures already announced by central banks around the world, these steps could not calm panic.
“It’s about influencing demand and disrupting the global supply chain … it doesn’t directly solve the key problem for the markets,” said Michael McCarthy of CMC Markets in Sydney.
The dollar resumed its rally against major currencies on Thursday, as high volatility in the financial markets and liquidity fears caused by the coronavirus pandemic led investors to flee for cash.
Oil prices rise on Thursday, recovering from the fall, while investors are trying to understand how effective large-scale incentives for central banks will be.
“I would say that the market is not investment right now,” said Daniel Cuthbertson of Value Point Asset Management in Sydney. “Until we get a hold on global cuts, the market will simply be without direction.”
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