UPDATE 1-Brazil's stocks, real rise, Bovespa eyes best week in four years

(Adds quote, detail)

By Jamie McGeever

BRASILIA, March 26 (Reuters) – Brazilian markets rallied on Thursday after a $2 trillion U.S. stimulus package boosted investor sentiment around the world, putting stocks on course for their biggest weekly gain in four years and the currency on track for its best week this year.

Measures of market volatility fell and lending spreads narrowed, indicating that the severe stress on Brazilian markets stemming from coronavirus pandemic fears in recent weeks were starting to ease.

The benchmark Bovespa stock market closed up 3.66% at 77,700 points and the real closed at 4.9957 per dollar , while implied FX volatility fell to its lowest in two weeks and some long-dated interest rate futures fell below 8%.

“Good news, the stock market is rising for the third day in a row,” said one senior trader in Sao Paulo, noting that firms with good cash buffers will survive the crisis and will offer good value to credit and equity investors.

The Bovespa’s rise took its gains so far this week to over 15%, which would be the biggest weekly increase since April, 2016, and the real is now up more than 1%, eyeing its biggest weekly gain this year.

Analysts at Citi said on Thursday that emerging market credit markets may have reached a bottom, and while volatility will remain high, “we could see some normalization following policy responses to curb the virus in G10 countries.”

Earlier on Thursday Brazil’s central bank lowered its 2020 economic growth outlook to zero from 2.2% due to the coronavirus impact.

Central bank President Roberto Campos Neto said the main channel of support for the financial system remains ensuring banks have ample liquidity, adding that he was completely relaxed about the strength and stability of the banking system.

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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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CEE MARKETS-Stocks jump on U.S. stimulus, but virus crisis not over

    By Anita Komuves
    BUDAPEST, March 25 (Reuters) - Central European stock
markets rose, led by Prague, and regional currencies gained on
Wednesday as the United States agreed on $2 trillion economic
stimulus bill, lifting market sentiment around the world. 
    The stimulus package includes a large increase in
unemployment insurance and hundreds of billions of dollars to
aid companies harmed by the coronavirus.
    "It is too early to open the champagne bottles, the plateau
of the pandemic is well ahead of us," CIB bank said in a note.
"And we will only be able to assess the damage to the real
economy later." 
    Central European governments have also announced a series of
emergency measures recently to counter the economic blow from
lockdowns, production halts and disruption to business activity
and supply chains.
    The Czech, the Polish and the Romanian central banks have
cut their benchmark rates. The National Bank of Hungary left
interest rates unchanged on Tuesday, as expected, and announced
further steps to boost liquidity. It introduced a new fixed-rate
collateralised loan instrument with unlimited liquidity.

    The first tender of the new instrument will be held later on
Wednesday. 
    "This tool will be able to stabilize not only lending, but
also the government securities market ... and this is what we
have seen today," Deputy Governor Marton Nagy said, referring to
a drop in yields, especially at the long end of the yield curve
on Tuesday.
    Five- and 10-year government bond yields dropped in Hungary
by more than 50 basis points on Tuesday before the NBH's
announcements, anticipating the measures, analysts say. 
    Yields on the 10-year Hungarian bonds were up by 20 basis
points on Wednesday, an FI trader in Budapest said. 
    "The market is disappointed because what the NBH announced
is not proper QE, contrary to what is happening in neighboring
countries," he said.
    The Hungarian forint gained 0.57% on Wednesday and
was trading at 352.50 to the euro after slipping the day before
as a reaction to the NBH's measures.
    Elsewhere, the Czech crown was also up, gaining
0.5% and trading at 27.557 to the euro. The zloty
gained 0.66% and was trading at 4.576. The Romanian leu
 was stable. 
    The Czech Republic holds a bond auction on Wednesday with
results due after 1100GMT.
    "Today's bonds auction will be a first test of where demand
currently is," Komercni Banka trader Dalimil Vyskovsky said in a
note. 
    "The finance ministry is offering a set of three bonds ...
as the issuer seems to be trying to offer investors a wider
range of instruments to test where demand will be strongest."
    Czech bond yields were dipping on Wednesday after a drop
yesterday, correcting from a spike in the past few days.
    Regional stock indexes were up, with Prague's equities
jumping more than 7% by 0857 GMT. Budapest and Bucharest
 were up by 3% and Warsaw's stocks gained nearly
3%.          

            CEE        SNAPSHOT    AT                         
            MARKETS               0957 CET            
                       CURRENCIE                              
                       S                              
                       Latest     Previous  Daily     Change
                       bid        close     change    in 2020
 Czech                   27.5570   27.6950    +0.50%    -7.71%
 crown                                                
 Hungary                352.5000  354.5000    +0.57%    -6.06%
 forint                                               
 Polish                   4.5761    4.6065    +0.66%    -6.99%
 zloty                                                
 Romanian                 4.8390    4.8445    +0.11%    -1.05%
 leu                                                  
 Croatian                 7.6090    7.6115    +0.03%    -2.15%
 kuna                                                 
 Serbian                117.4900  117.5450    +0.05%    +0.07%
 dinar                                                
 Note:      calculated from                 1800 CET          
 daily                                                
 change                                               
                                                              
                       Latest     Previous  Daily     Change
                                  close     change    in 2020
 Prague                   851.78  794.7400    +7.18%   -23.65%
 Budapest               33758.50  32614.56    +3.51%   -26.74%
 Warsaw                  1494.06   1451.02    +2.97%   -30.51%
 Bucharest               7719.84   7472.17    +3.31%   -22.63%
 Ljubljana                739.98    706.27    +4.77%   -20.08%
 Zagreb                  1437.84   1403.99    +2.41%   -28.73%
 Belgrade   <.BELEX15     623.04    616.31    +1.09%   -22.28%
            >                                         
 Sofia                    432.07    418.88    +3.15%   -23.95%
                                                              
                       Yield      Yield     Spread    Daily
                       (bid)      change    vs Bund   change
                                                      in
 Czech                                                spread
 Republic                                             
   2-year   <CZ2YT=RR     1.3210    0.0870   +192bps     +5bps
            >                                         
   5-year   <CZ5YT=RR     1.5120    0.0700   +199bps     +4bps
            >                                         
   10-year  <CZ10YT=R     1.5530   -0.0010   +185bps     -3bps
            R>                                        
 Poland                                                       
   2-year   <PL2YT=RR     0.9650    0.0320   +157bps     +0bps
            >                                         
   5-year   <PL5YT=RR     1.4220    0.0820   +190bps     +5bps
            >                                         
   10-year  <PL10YT=R     1.9420    0.1450   +224bps    +12bps
            R>                                        
            FORWARD                                           
                       3x6        6x9       9x12      3M
                                                      interban
                                                      k
 Czech Rep          <       0.69      0.40      0.35      1.76
            PRIBOR=>                                  
 Hungary            <       0.45      0.42      0.33      0.55
            BUBOR=>                                   
 Poland             <       0.55      0.42      0.44      1.17
            WIBOR=>                                   
 Note: FRA  are for ask prices                                
 quotes                                               
 ***************************************************          
 ***********                                          
 

 (Additional reporting by Jason Hovet in Prague and Alan
Charlish in Warsaw; editing by Larry King)
  
 
 

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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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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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