Oil prices mixed as demand shrinks, but stimulus hopes support

MELBOURNE (Reuters) – Oil prices were mixed on Thursday following three days of gains, with the prospect of rapidly dwindling demand due to coronavirus travel bans and lockdowns offsetting hopes a U.S. $2 trillion emergency stimulus will shore up economic activity.

West Texas Intermediate (WTI) crude CLc1 futures slipped 4 cents, or 0.2%, to $24.45 as of 0018 GMT, while Brent crude LCOc1 futures rose 12 cents, or 0.4%, to $27.51.

“With lockdowns in many countries, expectations of oil demand contracting by more than 10 million barrels per day (bpd) are rising. Such demand loss will increase the supply glut,” Australia and New Zealand Banking Group analysts said in a note.

The collapse of a supply-cut pact between the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia is set to boost oil supply, with Saudi Arabia planning to ship more than 10 million bpd from May.

“Production increases by Saudi Arabia and Russia loom, and things still look uncertain due to the ongoing price war between these two countries,” ANZ said.

U.S. crude inventories rose by 1.6 million barrels in the most recent week, the U.S. Energy Information Administration said on Wednesday, marking the ninth straight week of increases.

Products supplied, a proxy for U.S. demand, dropped nearly 10% to 19.4 million bpd, EIA data showed.

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Stocks rebound further as markets await $2 trillion U.S. stimulus boost

NEW YORK/LONDON (Reuters) – The dollar slid and global equity markets marched higher on Wednesday for a second day of gains, on optimism $2 trillion in U.S. fiscal stimulus will dampen the economic shock the coronavirus pandemic has started to inflict.U.S. senators will vote Wednesday. Top aides to Republican President Donald Trump and senior Republican and Democrat senators agreed on the unprecedented bill after five days of marathon talks.

Hopes that the bill, which amounts to nearly half the $4.7 trillion the U.S. government spends annually, will ease an expected recession lifted world stock indexes .MIWD00000PUS for back-to-back gains for the first time since markets sold off a month ago.

Europe’s main markets in London, Frankfurt and Paris struggled to stay positive after ripping 4%-5% higher. Oil prices swung from 3% up to 3% down. Wall Street also teetered, though the Dow industrials and S&P 500 mostly remained more than 1% higher while the Nasdaq closed lower. [.EU][.T][.N]

The Dow Jones Industrial Average .DJI soared more than 11% on Tuesday in its biggest single-day percentage gain since 1933 and the benchmark S&P 500 jumped 9.4% – its tenth biggest daily gain on record since a daily data series started in 1927.

The stimulus package marks progress but the devil is in the details, said Ron Temple, head of U.S. equity at Lazard Asset Management in New York. The legislation is not available to read to know how it will be executed or when money arrives at households and small businesses gain access to funding, he said.

“This is not the all-clear; it’s just material progress,” Temple said.

“Until we know we can go back to work safely, that we can go to restaurants and go to stores and engage with other humans in close proximity, I don’t think you can make an economic or a market call. It’s premature to be trying to call the bottom.”

The stimulus includes a $500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 apiece to millions of U.S. families.

It will also include $350 billion for small-business loans, $250 billion for expanded unemployment aid and at least $100 billion for hospitals and related health systems.

Countries that have locked down their populations to prevent the spread of the coronavirus need to use the time to find and attack the virus, the World Health Organization said.

As the United States works to screen thousands for the coronavirus, a new blood test offers the chance to find out who may have immunity. That could be a game changer in the battle to contain infections and get the economy back on track.

Over 450,000 people have been infected globally and more than 20,000 have died, according to a Reuters tally.

Data on Wednesday pointed to a fast-slowing economy that analysts said signaled the United States already is in recession.

New orders for key U.S.-made capital goods fell sharply in February as demand for machinery and other products slumped, suggesting a deepening contraction in business investment.

The benchmark S&P 500 is still nearly $8 trillion below its mid-February high, and investors expect more sharp swings.

MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 2.88% and emerging market stocks rose 4.40%.

The pan-European STOXX 600 index rose 3.09%.

The Dow Jones Industrial Average .DJI rose 495.64 points, or 2.39%, to 21,200.55. The S&P 500 .SPX gained 28.23 points, or 1.15%, to 2,475.56 and the Nasdaq Composite .IXIC dropped 33.56 points, or 0.45%, to 7,384.30.

In the currency markets, the dollar slipped for a third straight session as a scramble for liquidity was soothed by the super-sized U.S. stimulus plan. [/FRX]

The dollar index =USD fell 0.757%, with the euro EUR= up 0.92% to $1.0886. The Japanese yen JPY= strengthened 0.03% versus the greenback at 111.20 per dollar.

The risk-sensitive Australian dollar AUD=D3 jumped over the 60-U.S. cent mark for the first time in a week.

Bond markets were also calmer. Benchmark U.S. Treasuries were yielding 0.7987% while in Europe Germany’s 10-year yield DE10YT=RR edged a basis point higher to -0.296%, tailed by other higher-rated government debt. NL10YT=RR, AT10YT=RR

European Central Bank chief Christine Lagarde asked euro zone finance ministers during a videoconference on Tuesday to seriously consider a one-off joint debt issue of “coronabonds”, officials told Reuters.

In metals markets, gold changed hands at $1,608.78 an ounce XAU=, retaining most of Tuesday’s gains of almost 5%, its biggest jump since 2008.

U.S. crude prices rose slightly, bolstered by progress on a massive pending U.S. economic stimulus package.

Brent crude LCOc1 gained 24 cents to settle at $27.39 a barrel. U.S. crude CLc1 futures rose 48 cents to settle at $24.49 a barrel.

U.S. gold futures GCcv1 settled 1.5% lower at $1,634.90 an ounce, a day after posting their biggest one-day jump since2009.

GRAPHIC: Global equities post first back-to-back gain during virus sell-off – here

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Asian shares track Wall Street surge as U.S. stimulus hopes grow

TOKYO (Reuters) – Asian shares extended their rally on Wednesday in the wake of Wall Street’s big gains as U.S. Congress appeared closer to passing a $2 trillion stimulus package to curb the coronavirus pandemic’s economic toll.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.3% with Australian shares rising 4.5% and South Korean shares .KS11 gaining 4.0%. Japan’s Nikkei .N225 added 2.0%.

“Japanese shares have been bolstered by aggressive buying from the Bank of Japan and pension money this week. That has prompted hedge funds to cover their short positions,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

On Tuesday, MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 8.39%, the largest single-day gain since the wild swings seen during the height of the global financial crisis in October 2008.

On Wall Street, the Dow Jones Industrial Average .DJI soared 11.37%, its biggest one-day percentage gain since 1933.

U.S. stock futures EScv1 were down 0.5% in early Asian trade.

Senior Democrats and Republicans in the divided U.S. Congress said on Tuesday they were close to a deal on a $2 trillion stimulus package to limit the coronavirus pandemic’s economic toll. But it was unclear when they would be ready to vote on a bill.

Investor fears about a sharp economic downturn are easing after the U.S. Federal Reserve’s offer of unlimited bond-buying and programs to buy corporate debt.

In the currency market, the dollar has slipped as a greenback liquidity crunch loosened slightly.

The euro traded at $1.0798 EUR= after four straight days of gains.

The dollar stayed firmer against the yen due to dollar demands at the March 31 end of the Japanese financial, trading at 111.33 yen JPY=, near a one-month high of 111.715 touched the previous day.

Gold soared almost 5%, its biggest gains since 2008, on Tuesday and last stood at $1,633 XAU=, in part helped by concerns lockdowns in major producer South Africa could disrupt supply.

Still, the course of the market is still largely dependent on how much countries can slow the pandemic and how quickly they can lift various curbs on economic activity.

Confirmed cases are now topping 400,000 globally with New York City suffering another quick and brutal rise in the number of infections to around 15,000.

Oil prices steadied as hopes for U.S. stimulus offset fears from falling global demand.

India, the world’s third largest oil consumer, ordered its 1.3 billion residents to stay home for three weeks, the latest big fuel user to announce restrictions on social movement, which have destroyed demand for gasoline and jet fuel worldwide.

The market remained pressured by a flood of supply after Saudi Arabia started a price war earlier this month, a move that dealt a crushing blow to markets already reeling from the epidemic.

U.S crude futures CLc1 rose 1.8% to $24.45 per barrel.

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Stocks, gold surge as Congress nears $2 trillion aid package

NEW YORK/LONDON (Reuters) – Stock markets soared on Tuesday, with a gauge of global equities posting its biggest gain since the coronavirus roiled financial markets a month ago, as the U.S. Congress zoned in on a $2 trillion stimulus package to curb the pandemic’s economic toll.

Senate Majority Leader Mitch McConnell said a deal was “very close” for an aid package that investors hoped would turn around markets reeling from the biggest downturn since the global financial crisis more than a decade ago.

The market rally came a day after the U.S. Federal Reserve’s offer of unlimited bond-buying to help avert a global depression failed to persuade skittish investors, at least initially.

The mood improved on Tuesday, with U.S. gold futures climbing as much as 6.7% to $1,672.60 an ounce and the dollar halting its steady rise as the moves by the Fed and others eased the need for cash and slashed the demand for dollars.

The rally led some to suggest a rout that has trimmed U.S. and European equities by roughly 30% in the past month may be near an end.

“We’re seeing some signs that a bottoming is happening,” said Neel Shah, senior trader at Peak6 Capital Management. “The next big step is the Senate passing the stimulus bill.”

U.S. and European stocks jumped 6% or more and the dollar index, a basket of major trading currencies, slid.

MSCI’s gauge of stocks across the globe gained 8.39%, the largest single-day gain since equities tumbled from all-time highs a month ago and since the height of the global financial crisis in October 2008.

The broad pan-European STOXX 600 index rose 8.40%, its strongest session since late-2008. The index is still down about 30% from a record peak hit in February.

German stocks jumped 11% and British blue chips added 9% as both bourses also posted their best sessionssince 2008.

Europe’s so-called fear gauge fell to 52.53, itslowest in nearly two weeks, after spiking to 12-year highsearlier this month.

Emerging market stocks rose 5.73%.

The rally was wide, lifting most stocks, with only 11 S&P 500 stocks declining on the day.

On Wall Street, the Dow Jones Industrial Average rose 2,112.98 points, or 11.37%, to 20,704.91. The S&P 500 gained 209.93 points, or 9.38%, to 2,447.33 and the Nasdaq Composite added 557.18 points, or 8.12%, to 7,417.86.

(Graphic: Volatility is back on Wall Street, here)

Measures the Fed unveiled on Monday to boost liquidity across debt markets and backstop lending were seen by investors as helping market conditions.

“The Fed’s measures are unprecedented, and they have been extremely proactive in preventing this external shock from morphing into a wider funding crisis,” said Vasileios Gkionakis, head of FX strategy at Lombard Odier.

The Fed also will expand its mandate to buy corporate and municipal bonds and backstop a series of other measures that analysts estimate will deliver more than $4 trillion in loans to non-financial firms.

Other countries unveiled their own measures. South Korea’s ravaged market climbed 8.6% after the government doubled a planned economic rescue package to 100 trillion won ($80 billion).

In China, mainland stocks posted their biggest gain in three weeks of almost 3%, while Japan’s Nikkei soared 7%, its biggest daily gain in four years. [.SS][.T]

Still, investors remained wary, as the number of coronavirus infections globally neared 400,000 and new infections brought in from abroad rose in China.

Business activity collapsed from Australia and Japan to Western Europe at a record pace in March, as measures to contain the outbreak hammered the world economy, and Japan said it was postponing the Olympics.

IHS Markit’s flash composite Purchasing Managers’ Index (PMI) for the euro zone, seen as a good gauge of economic health, plummeted to a record low of 31.4 in March, the biggest one-month fall since the survey began in 1998.

The government and central bank financial support helped calm nerves in bond markets, where yields on two-year U.S. Treasuries hit their lowest since 2013.

The benchmark 10-year U.S. Treasury note fell 31/32 in price to yield 0.8642%.

Germany’s 10-year yield was up 2 basis points on the day at -0.36%, compared with a 4 bps rise before the purchasing managers index (PMI) releases, all small moves when compared to record lows hit at -0.90% earlier in March.

(Graphic: Global financial markets since coronavirus escalated, here)

ALL ABOUT THE ECONOMY

The impact of the virus on the global economy is evident in a series of growth forecast downgrades and advance readings of PMIs across the world’s biggest economies.

German activity plunged to the lowest since the 2009 crisis, driven by a record services contraction, while French activity hit all-time lows. Japan posted its biggest-ever services fall.

However, the prospect of massive Fed funding pushed the greenback 0.26% lower against rivals, off three-year peaks, falling against the yen and sliding 1% versus the euro.

Brent futures rose 12 cents to settle at $27.15 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 65 cents to settle at $24.01.

(Graphic: China’s coronavirus cases, here)

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Dollar slips as Fed's money bazooka loosens tight cash supply

TOKYO (Reuters) – The dollar slipped on Tuesday on signs tight funding conditions are easing slightly after the U.S. Federal Reserve pulled out all stops to supply much needed greenback liquidity.

The Fed announced unlimited quantitative easing and programs to support credit markets on Monday in a drastic bid to backstop an economy reeling from emergency restrictions on commerce to fight the coronavirus.

“We seem to have got out of a phase where everything from stocks to safe assets such as bonds and gold were sold,” said Koichi Kobayashi, chief manager of forex at Mitsubishi Trust Bank.

“The dollar funding conditions are easing slightly, compared with a week ago, though I wouldn’t say things are normal. While the Fed is pumping dollars, we still need to wait and see if those money will flows to every corner of the economy.”

The dollar index =USD lost about 0.5% to 101.64, slipping further from Friday’s peak of 102.99, its highest level since January 2017.

Against the yen, the dollar shed 1% to 110.19 yen JPY=, having hit a one-month high of 111.59 in the previous session.

The euro gained 0.8% to $1.0810 EUR=, bouncing back from a near three-year low of $1.0636 in the previous session.

The British pound also rose 0.8% to $1.1650 GBP=D4, up more than two cents from its 35-year low of $1.1413 set last week.

The Fed, which has already expanded its balance sheet to a record level, undertook unprecedented measures to extend its “lender of last resort” power beyond Wall Street to Main Street and City Hall.

It announced various programs including purchases of corporate bonds, guarantees for direct loans to companies and a plan to get credit to small and medium-sized business.

The radical steps came after U.S. money markets seized up as a broad set of market participants, from big multinational carmakers to small shop owners, hoarded dollars fearing a slump in cashflow during lockdowns in their countries.

While the Fed’s move is likely to mitigate the blow for many companies in the long-run, investors remained on edge amid uncertainty about the extent of the pandemic.

Coronavirus cases continued to rise exponentially in many countries, raising worries about the lack of hospital beds in some areas.

Wall Street’s slide deepened on Monday as the rapidly spreading coronavirus forced more U.S. states into lockdown while Washington’s fiscal stimulus package remained stalled in the Senate.

“The market is still nervous about possible moves to cash everything, including unwinding of existing derivative positions,” said Kyosuke Suzuki, director of forex at Societe Generale.

The three-month dollar/yen currency basis swap spread, seen as the market premium demanded for swapping yen for dollar, stood at 0.80% JPYCBS3M=TKFX, down from a peak of around 1.4% last week but still far above normal levels around 0.2-0.4%.

Trading remained volatile, with the Australian dollar rising 1.8% to $0.5932 AUD=D4, extending its recovery from a 17-year low of $0.5510 touched last week.

The Mexican peso MXN=D4 and the South African rand ZAR=D4 jumped more than 1% and many emerging market currencies gained too.

Market players are looking to a raft of business sentiment surveys in Europe due later in the day for a glimpse of how the virus is affecting the real economy.

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Asia stocks rally, Fed launches limitless QE against economic reality

SYDNEY (Reuters) – Asian stocks rallied on Tuesday as the U.S. Federal Reserve’s sweeping pledge to spend whatever it took to stabilize the financial system eased debt market pressures, even if it could not offset the immediate economic hit of the coronavirus.

While Wall Street seemed unimpressed, investors in Asia were encouraged enough to lift E-Mini futures for the S&P 500 ESc1 by 1.9% and Japan’s Nikkei .N225 by 4.9%.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 1.2%, though that followed a drop of almost 6% on Monday. South Korea .KS11 and Australia also recouped a little of their recent losses.

In its latest drastic step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and muni bonds.

The numbers were certainly large, with analysts estimating the package could make $4 trillion or more in loans to non-financial firms.

“This open-ended and massively stepped-up program of QE is a very clear signal that the Fed will do all that is needed to maintain the integrity and liquidity of the Treasury market, key asset-backed markets and other core markets,” said David de Garis, a director of economics at NAB.

“COVID-19 developments remain the wild card, as is the development of government policies to support cash flow and the economy.”

The Fed’s package helped calm nerves in bond markets where yields on two-year Treasuries hit their lowest sine 2013, while 10-year yields dropped back sharply to 0.77% US10YT=RR.

Yet analysts fear it will do little to offset the near-term economic damage done by mass lockdowns and layoffs.

Speculation is mounting data due on Thursday will show U.S. jobless claims rose an eye-watering 1 million last week, with forecasts ranging as high as 4 million.

Goldman Sachs warned the U.S. economic growth could contract by 24% in the second quarter, two-and-a-half times as large as the previous postwar record.

A range of flash surveys on European and U.S. manufacturing for March are due later on Tuesday and are expected to show deep declines into recessionary territory.

While governments around the globe are launching ever-larger fiscal stimulus packages, the latest U.S. effort remains stalled in the Senate as Democrats said it contained too little money for hospitals and not enough limits on funds for big business.

The logjam combined with the stimulus splash from the Fed to take a little of the shine off the U.S. dollar, though it remains in demand as a global store of liquidity.

“The special role of the USD in the world’s financial system – it is used globally in a range of transactions such as commodity pricing, bond issuance and international bank lending – means USD liquidity is at a premium,” said CBA economist Joseph Capurso.

“While liquidity is an issue, the USD will remain strong.”

The dollar eased just a touch on the yen to 110.90 JPY= after hitting a one-month top at 111.59 on Monday, while the euro inched up to $1.0754 EUR= from a three-year trough of $1.0635.

The dollar index stood at 102.120 =USD, off a three-year peak of 102.99.

Gold surged in the wake of the Fed’s promise of yet more cheap money, and was last at $1,564.51 per ounce XAU= having rallied from a low of $1,484.65 on Monday. [GOL/]

Oil prices also bounced after recent savage losses, with U.S. crude CLc1 up 64 cents at $24.00 barrel. Brent crude LCOc1 firmed 53 cents to $27.56. [O/R]

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Dollar rules; ECB stimulus boosts bonds but not stocks

LONDON (Reuters) – The dollar surged on Thursday as extraordinary steps by central banks across the world to stem a coronavirus-induced financial rout saw mixed success, boosting bonds but failing to halt losses in stocks.

The dollar gained as investors rushed to secure liquidity, pushing the British pound GBP=D3 down 0.9% to its lowest since 1985 and rising 1% against major currencies =USD to its highest since March 2017.

Bond markets stabilized somewhat after the European Central Bank pledged late on Wednesday to buy 750 billion euros ($820 billion) in sovereign debt through 2020.

That brought the ECB’s planned purchases for this year to 1.1 trillion euro, with the new purchases alone worth 6% of the euro zone’s GDP.

Government bond yields in Italy and across the euro zone dropped after the ECB’s emergency measures, though European stocks fell back into negative territory after arresting their rout in early trading.

“The announcement (the ECB) has made has gone some way to comforting markets that borrowing costs in those economies won’t be allowed to spiral higher,” said Mike Bell, global market strategist at J.P. Morgan Asset Management.

Europe’s broad Euro STOXX 600 fell 0.9% after gaining more than 1% in early trading. Indexes in Frankfurt .GDAXI, Paris .FCHI and London’s FTSE .FTSE all saw advances wiped out.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan slumped by 4% .MIAPJ0000PUS. Korea and Taiwan led the losses as the index plunged to a four-year low, with circuit breakers triggered in Seoul, Jakarta and Manila.

Expected price swings for some of the world’s biggest currencies rocketed to multi-year highs as the demand for dollars forced traders to dump currencies across the board.

For the British pound versus the dollar, expected volatility gauges leapt to 24.4%, their highest level since before the 2016 Brexit vote.

“One unresolved and really critical issue is what’s going on in volatility,” said Andrew Sheets, chief cross-asset strategist at Morgan Stanley. “I think that volatility needs to stabilize before the broader market can heal.”

MSCI’s world equity index .MIWD00000PUS, which tracks shares in 49 countries, fell 0.9%. Wall Street futures also fell, pointing in volatile trading to losses of around 2%. EScv1.

ITALIAN YIELDS FALL

Italy, which has seen its borrowing costs jump in recent days, led the drop in yields after the ECB move.

Its two-year bond yields slumped by than 100 basis points to 0.41% IT2YT=RR, heading for their biggest one-day fall since 1996. Italy’s 10-year bond yields slid as much as 90 bps to 1.40% IT10YT=RR.

The gap over the safer German Bund’s yields tightened almost 100 bps from Wednesday’s closing levels and were set for the biggest daily drop since the 2011 euro one crisis.

Markets elsewhere failed to respond to central bank action. Before the ECB move, the U.S. Federal Reserve promised a liquidity facility for money market mutual funds and the Bank of Japan made two unscheduled bond purchases totaling 1.3 trillion yen ($12 billion).

The Australian central bank slashed interest rates to a record low of 0.25%.

Traders reported huge strains in bond markets, however, as distressed funds sold any liquid asset to cover losses in stocks and redemptions from investors.

Benchmark 10-year sovereign bond yields in New Zealand, Malaysia, Korea and Singapore and Thailand surged as prices fell, and U.S. 10 year Treasuries US10YT=RR rose 10 basis points through the session.

“Not only central banks but governments are throwing everything at the economy right now, but markets aren’t responding,” said Luca Paolini, chief strategist at Pictet Asset Management.

Commodities also fell as the virus outbreak worsened. The pandemic has killed almost 9,000 people globally, infected more than 218,000 and prompted widespread emergency lockdowns.

Gold XAU= fell 1%, and like other assets was buffeted by volatility. Copper hit its down-limit in Shanghai.

Oil jumped after an overnight plunge to an 18-year low in Asian trade. Brent LCOc1 was last up $1.16 to $26.04.

Underlining expectations of severe economic damage from the pandemic, J.P. Morgan economists forecast the U.S. economy will shrink 14% in the next quarter and the Chinese economy will lose more than 40% on an annualized basis in the current one.

“There is no longer doubt that the longest global expansion on record will end this quarter,” they said in a note. “The key outlook issue now is gauging the depth and the duration of the 2020 recession.”

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Dollar surges, stocks fall as ECB fails to stop panic

SINGAPORE (Reuters) – The dollar surged, bonds plunged and global markets struggled to find their footing on Thursday as the European Central Bank’s latest promise of stimulus provided only brief solace while the world struggles to contain the coronavirus pandemic.

U.S. stock futures EScv1 fell 2%. The Australian dollar was crushed, falling 3.3% to a more than 17-year low, and Asian markets gave up initial gains made after the ECB had announced a bond-buying program.

By midmorning, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had fallen 4% to an almost four-year low. Australia’s benchmark erased an early 3% rise to trade 2% in the red.

Korea’s Kospi .KS11 fell 6% and the won hit a decade-low even as the central bank was buying dollars to prop up the currency. Markets in Hong Kong and China fell.

“We’re in this phase where investors are just looking to liquidate their positions,” said Prashant Newnaha, senior interest rate strategist at TD Securities in Singapore.

Overnight on Wall Street, the S&P 500 .SPX fell 5% and is down nearly 30% over a month. Household-name blue chips plunged, with General Motors (GM.N) and Boeing (BA.N), each symbols of U.S. industrial might, losing more than 17% in a single day.

The ECB on Wednesday pledged to buy 750 billion euro ($820 billion) in bonds through 2020, with Greek debt and non-financial commercial paper eligible under the program for the first time.

It follows emergency interest rate cuts around the globe, enormous fiscal support packages and six central banks promising discount dollars to alleviate a squeeze in greenback funding.

But so far none of it has been able to put a floor under dire sentiment, and some $15 trillion in shareholder value has been wiped out in little more than a month of heavy selling.

“Liquidity is not the problem this time around,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.

“This is about the impact on demand and the disruption of global supply chain…(bond buying) is not speaking directly to the key problem for markets.”

SELL EVERYTHING

Selling extended across almost all asset classes. Benchmark 10-year sovereign bond yields in Australia, New Zealand, Malaysia, Korea and Singapore and Thailand surged.

In currency markets, everything except the dollar and – thanks to the ECB, the euro – collapsed. Sterling GBP= fell 1% to $1.1495. The New Zealand dollar NZD=D3 fell 3% to $0.5540 and the Aussie AUD=D3 was pounded to $0.5592.

The Reserve Bank of Australia is due to make an out-of-cycle policy announcement at 0330 GMT at which it is expected to cut rates and introduce quantitative easing for the first time.

U.S. 10-year Treasuries US10YT=RR, usually a haven in times of turmoil, were steady but have suffered their sharpest two-day selloff in nearly 20 years.

Gold XAU= is down 3% for the week.

“I’d say the market is uninvestable at this point,” said Daniel Cuthbertson, managing director at Value Point Asset Management in Sydney. “Until we get a containment of global contractions, the market is just going to be directionless.”

And the virus outbreak has worsened. Italy on Wednesday reported the largest single-day death toll increase from coronavirus since the outbreak began in China in late 2019.

It has killed more than 8,700 people globally, infected more than 212,000 and prompted emergency lockdowns on a scale not seen in living memory.

Investors are looking to a March German sentiment survey due at 0900 GMT and U.S. jobless figures due at 1230 GMT for early signals on how the virus is hitting two of the world’s economic powerhouses.

The U.S. economy could shrink 14% next quarter, a JP Morgan economist said on Wednesday, one of the most dire calls yet on the potential hit to the United States.

Oil bounced back in Asian trade, with U.S. crude CLc1 last up 12% to $22.73 and Brent LCOc1 up $1.66 to $26.54.

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Asian stocks fight for a toehold as ECB stimulus slows panic

SINGAPORE (Reuters) – Asian stocks struggled to find their footing in volatile trade on Thursday, as the latest promise of stimulus from the European Central Bank propped up sentiment while the world struggles to contain the coronavirus pandemic.

U.S. stock futures EScv1 turned positive and rose nearly 2% after the ECB announced a bond-buying program. Japan’s Nikkei .N225 opened 1.4% higher.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.25% amid choppy trade throughout the region, with Australia’s benchmark running as much as 3% higher before returning to flat and Korea’s Kospi .KS11 gyrating.

The ECB will buy 750 billion euro ($820 billion) in bonds through 2020, with Greek debt and non-financial commercial paper eligible under the program for the first time.

“It’s given us a shot in the arm,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney, but he added he expects it to be short-lived.

“This is about the impact on demand and the disruption of global supply chain…(bond buying) is not speaking directly to the key problem for markets. I doubt very much this is a turning point,” he said.

Underlining the fragility of sentiment

Overnight on Wall Street, the S&P 500 .SPX fell 5% and is down nearly 30% over a month. Household-name blue chips plunged, with General Motors (GM.N) and Boeing (BA.N), each symbols of U.S. industrial might, losing more than 17% in a single day.

Selling extended across almost all asset classes as investors liquidated portfolios.

Benchmark U.S. 10-year Treasuries US10YT=RR, usually a haven in times of turmoil, suffered their sharpest two-day selloff in nearly 20 years. Gold XAU= is down 3% for the week and oil fell to an 18-year low as quarantine lockdowns spread across the globe.

In currency markets, the dollar is king and jumped to a three-year high overnight amid a rush for the world’s reserve currency in times of crisis.

On Wednesday, the virus outbreak worsened. Italy reported the largest single-day death toll from coronavirus since the outbreak began in China in late 2019.

It has killed more than 8,700 people globally, infected more than 212,000 and prompted emergency lockdowns on a scale not seen in living memory.

“It is serious. Take it seriously,” German Chancellor Angela Merkel told her nation in a televised speech amid the shutdown of almost everything except bakeries, banks, pharmacies and grocers.

The ECB’s move follows emergency interest rate cuts around the globe, enormous fiscal support packages and six central banks promising discount dollars to banks to alleviate a squeeze in greenback funding.

But so far none of it has been able to put a floor under dire sentiment, and some $15 trillion in shareholder value has been wiped out in little more than a month of heavy selling.

The U.S. economy could shrink 14% next quarter, a JP Morgan economist said on Wednesday, one of the most dire calls yet on the potential hit to the United States.

“I’d say the market is uninvestable at this point,” said Daniel Cuthbertson, managing director at Value Point Asset Management in Sydney. “Until we get a containment of global contractions, the market is just going to be directionless.”

On Thursday, the Reserve Bank of Australia pumped a record $7.4 billion into the banking system and is due to make an out-of-cycle policy announcement at 0330 GMT.

Investors are also looking to a March German sentiment survey due at 0900 GMT and U.S. jobless figures due at 1230 GMT for early signals on how the virus is hitting two of the world’s economic powerhouses.

Oil bounced back in Asian trade, with U.S. crude CLc1 last up 17% to $23.84 and Brent LCOc1 up $2 to $27.06.

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Markets tumble as scale of stimulus programs numbs investors

NEW YORK (Reuters) – Global equities tumbled anew on Wednesday, with bond and gold prices also falling in an unusual tandem, as markets grappled with the sheer scale of government programs and handouts aimed at softening the economic shockwave from the coronavirus.

The Trump administration asked Congress to approve $500 billion in cash payments to taxpayers in two rounds starting April 6 and $50 billion in secured loans to U.S. airlines to address the outbreak’s impact, according to a document seen by Reuters.

Traders are struggling to sort out the various moves by global central banks and governments to shore up economies bracing for what looms as a short but deep global recession from a pandemic still on the rise.

Investors dumped precious metals and other safe-havens in favor of cash after the additional U.S. stimulus measures announced Tuesday failed to calm markets hit by mounting fears over the economic downside from the coronavirus.

Estimates for the duration of the damage extend out into the summer. Japan already is in a recession, a downturn is imminent in Europe and a U.S. recession will start in the second quarter, a report from IHS Markit said.

The coronavirus has raised the prospect of the steepest ever annual fall in oil demand, Goldman Sachs said. U.S. crude futures plummeted to an 18-year low and Brent hit more than 16-year low as travel and social lockdowns slammed demand.

Certain correlations are breaking down in the markets as typical safe-haven assets sell off, said Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York.

“During a dramatic risk-off situation you would expect to see at least a little bit of a bid in bonds or maybe in gold, but we’re seeing the opposite,” Abbasi said.

“Despite the continued pain in equities, the safe-haven asset correlation seems to be now trading with risk assets, rather than the inverse to them,” he said.

Bond prices tumbled, instead of rising, as investors sold to raise cash. Yields on the benchmark 10-year U.S. Treasury yield rose to 1.257%, after earlier hitting 1.226%.

In Europe, the gap between German and other euro zone bond yields widened, with investors demanding higher premiums to hold anything but German debt.

Ten-year French government bonds yielded 69 basis points more than their German counterparts, the most since April 2017.The gap between 10-year German and Dutch debt grew as wide as 37basis points, the most since July 2015.

Gold dropped 2%, falling below $1,500 an ounce.

“Gold continues to suffer from risk-off panics in the market, trading back below $1,500 level,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

“Liquidity here, as in most markets, is deeply compromised and we expect to see continuing volatility, mood-driven swings,” Wong said.

MSCI’s gauge of stocks across the globe shed 6.26% and emerging market stocks lost 5.34%. The pan-European STOXX 600 index lost 3.99%.

On Wall Street, the Dow Jones Industrial Average fell 1,660.63 points, or 7.82%, to 19,576.75. The S&P 500 lost 177.29 points, or 7.01%, to 2,351.9 and the Nasdaq Composite dropped 462.37 points, or 6.3%, to 6,872.41.

Boeing Co fell another -22.1% as the planemaker called for a $60 billion bailout for U.S. aerospace manufacturers facing the fallout of an extended collapse in global travel.

European bourses tumbled, with indexes in London, Frankfurt and Paris plunged from 4% to 5%.

In Asia, the MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 4% to lows last seen in summer 2016, led by a 6.4% fall in Australia. Japan’s Nikkei dipped 1.7%.

The economic slowdown will be tough on travel-related industries, gaming and brick and mortar retail, said Scott Crowe, chief investment strategist at real estate-focused CenterSquare Investment Management in Philadelphia.

U.S. clothing retailer Gap Inc and luxury department store operator Neiman Marcus will close their stores for two weeks, joining other retailers in a vast effort to stem the spread of the coronavirus.

“It’s a little less obvious whether the government will start bailing out retailers. The problem is that a lot of these retailers were already teetering on a knife edge coming into this,” Crowe said. “There are very few industries right now that can sustain to a four- to eight-week shutdown.”

U.S. crude hit its lowest since March 2002, falling even after weekly government data was less bearish than expected. The draw on gasoline stockpiles and smaller-than-expected build in crude inventories showed that people were preparing ahead of business and school closings, analysts said.

U.S. crude fell 18.18% to $22.05 per barrel.

(Graphic: Market selloff speed, severity eclipses previous dislocations, here)

“We are in the midst of the mayhem really, and I think there is still a risk that the increasing number of infections will keep markets on their toes,” said Hans Peterson, global head of asset allocation at SEB investment management.

“It is hard to know how deep the recession will be, and as long as we have that situation it is hard to lift sentiment.”

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