Asia Shares Jump

At the start of today’s Asia session, stocks bounced on optimism that the coronavirus outbreak may be reaching a peak. However, investors are watching on with caution as Chinese trade data and corporate earnings show signals of a heavy global recession.

Chinese shares have showed positive signs, with the blue-chip index (.CSI300) up 0.7%. Australian shares were up 0.6%, while South Korea’s KOSPI index (.KS11) and Japan’s Nikkei (.N225) each gained 1.4%. Hong Kong growth was smaller, with it’s Hang Seng (.HSI) only rising 0.2%.

Investors will be keeping a close eye on China’s trade data, which is forecast to show that exports have dropped by around 14% during March from the same period a year ago.

Some analysts are speculating that any optimism from governments over signs that the outbreak may be peaking in some of their hard-hit cities will be quickly offset by concern that it may take much longer for businesses and economies to recover.

Wall Street indexes ended mixed on Monday with the Dow Jones and S&P 500 falling while a 6.2% gain in Amazon shares helped the Nasdaq end higher.

In Asia, an expected trade slump in China will reinforce views that the world is heading for a global recession later this year, despite unprecedented rescue measures from policy-makers over the past two months in an attempt to stabilise growth.

Many analysts already expect China’s economy, the world’s second-largest, to have contracted sharply in the March quarter for the first time since at least 1992. China will report gross domestic product data for the first-quarter on April 17th.

A weak report could see China increase their own monetary and fiscal stimulus plans in a bid to boost its own economy. If China shows signs that it is taking measures to support domestic economic activity, then global industries can take steps towards recovery towards the second half of 2020. This will be positive for commodities, especially industrial metals, but will hurt the U.S. dollar and push yields higher.

The dollar continued to extend losses on the back of the U.S. Federal Reserve’s massive new lending programme. The greenback was a touch weaker against the Japanese yen at 107.62. The euro was up slightly to $1.0923. The risk-sensitive Australian dollar jumped 0.5% to $0.6415.

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