Asia shares edge up, China factories show flicker of life

SYDNEY (Reuters) – Asian shares managed a tentative rally on Tuesday as factory data from China held out the hope of a rebound in activity even as other countries across the globe all but shut down.

China’s official manufacturing purchasing managers’ index (PMI) bounced to 52.0 in March, up from a record-low 35.7 in February and topping forecasts of 45.0.

Analysts cautioned the index could overstate the true improvement as it measures the net balance of firms reporting an expansion or contraction in activity.

If a company merely resumed working after a forced stoppage, it would read as an expansion without saying much about the overall level of activity.

Still, the headline number was a relief and helped MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rise 1.1%.

Japan’s Nikkei .N225 firmed 1.0% after a jittery start, while South Korea .KS11 added 2%.

E-Mini futures for the S&P 500 ESc1 added another 0.6%, supported by talk of book-keeping demand.

“It’s month-end rebalancing, whereby balanced funds now underweight equities versus fixed income given this month’s valuation destruction, need to buy stocks to get back into balance,” analysts at NAB said.

Healthcare had led Wall Street higher, with the Dow .DJI ending Monday up 3.19%, while the S&P 500 .SPX gained 3.35% and the Nasdaq .IXIC 3.62%. [.N]

News on the coronavirus remained grim but radical stimulus steps by governments and central banks have at least provided some comfort to economies.

Infections in hard-hit Italy slowed a little, but the government still extended its lockdown to mid-April. California reported a steep rise in people being hospitalized, while Washington state told people to stay at home.

Trade ministers from the Group of 20 major economies agreed on Monday to keep their markets open and ensure the flow of vital medical supplies.

OIL PRICES OVERWHELMED

Portfolio management also played a part in the forex market where many fund managers found themselves over-hedged on their U.S. equity holdings given the sharp fall in values seen this month, leading them to buy back dollars.

That saw the euro ease back to $1.1020 EUR=, from a top of $1.143 on Monday, while the dollar index bounced to 99.330, from a trough of 98.330. [USD/]

Month-end demand for dollars from Japanese funds saw the dollar inch up to 108.45 yen JPY=, though it remained some way from last week’s peak at 111.71.

Oil prices plunged to the lowest in almost 18 years on Monday as lockdowns for the virus squeezed demand even as Saudi Arabia and Russia vied to pump more product. [O/R]

In a new twist, U.S. President Donald Trump and Russian President Vladimir Putin agreed during a phone call on Monday to have their top energy officials meet to discuss slumping prices.

“However, the reality is that the level damage to demand is likely to overwhelm any production cut agreement between major producers,” wrote analysts at ANZ in a note.

“The lockdown of cities around the world and the shutdown of the aviation industry will cause a fall in demand the industry has never seen before.”

Prices did at least try and steady early Tuesday, with U.S. crude CLc1 up 56 cents to $20.64. Brent crude LCOc1 futures gained 19 cents to $22.95 a barrel.

In the gold market all the talk has been of a rush of demand for the physical product amid shortages in coins and small bars. Flows into gold-backed ETFs have ballooned by $13 billion so far this year, the most since 2004.

The metal was holding at $1,615 an ounce XAU=, well up from a low of $1,450 touched early in the month. [GOL/]

GRAPHIC: Asian stock markets : here

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REFILE-GLOBAL MARKETS-Asia shares suffer virus chills, central banks offer cold comfort

(Refiles to fix ASX200 RIC, add FTSE futures RIC)

* Asian stock markets : tmsnrt.rs/2zpUAr4

* Australia bucks trend, closes up 7% after jobs package

* Nikkei leads rest of Asia lower, S&P and European futures rally

* Singapore eases monetary policy

* Oil on the slide as supply engulfs demand

By Wayne Cole and Alun John

SYDNEY/HONG KONG, March 30 (Reuters) – Asian shares slid on Monday as fears mounted that the global coronavirus shutdown could last for months although markets regained some lost ground late in the session with Australia posting a standout jump.

U.S. and European futures also turned upwards in the Asian afternoon, with E-Mini futures for the S&P 500 up 1.1%, again after earlier losses, EUROSTOXXX 50 futures rallying 2% and FTSE futures 1.5%.

Australia’s benchmark ASX200 saw a late surge, closing up 7% after Prime Minister Scott Morrison unveiled a $130 billion ($79.86 billion) package to help save jobs.

Most other markets were down but trimmed earlier losses. Japan’s Nikkei dropped 1.57%, Shanghai blue chips were down 0.94%, and there were sharper drops in Southeast Asia, with Singapore’ benchmark index down 2.95%.

That left MSCI’s broadest index of Asia-Pacific shares outside Japan nearly flat.

“Markets in Asia are reacting to concerns about the knock-on economic impact of the coronavirus situation in Europe and North America, rather than Asian case numbers,” said Suresh Tantia senior investment strategist at Credit Suisse.

JPMorgan now predicts that global GDP could contract at a 10.5% annualised rate in the first half of the year.

“We continue to mark down 1H20 global GDP forecasts as our assessment of both the global pandemic’s reach and the damage related to necessary containment policies has increased,” said JPMorgan economist Bruce Kasman.

As a result, central banks have mounted an all-out effort to bolster activity with rate cuts and massive asset-buying campaigns, which have at least eased liquidity strains in markets.

China on Monday became the latest to add stimulus with a cut of 20 basis points in a key repo rate, the largest in nearly five years.

Singapore also eased as the city-state’s bellwether economy braced for a deep recession, while New Zealand’s central bank said it would take corporate debt as collateral for loans.

Rodrigo Catril, a senior FX strategist at NAB, said the main question for markets was whether all the stimulus would be enough to help the global economy withstand the shock.

“To answer this question, one needs to know the magnitude of the containment measures and for how long they will be implemented,” he added. “This is the big unknown and it suggests markets are likely to remain volatile until this uncertainty is resolved.”

DOLLAR NOT DONE YET

Bond investors looked to be bracing for a long haul with yields at the very short end of the Treasury curve turning negative and those on 10-year notes dropping a steep 26 basis points last week to last stand at 0.68%.

That drop has combined with efforts by the Federal Reserve to pump more U.S. dollars into markets, and dragged the currency off recent highs.

Against the yen, the dollar was pinned at 107.74, well off the recent high of 111.71. The euro edged back to $1.083, after rallying more than 4% last week.

“Ultimately, we expect the USD will soon reassert itself as one of the strongest currencies,” argued analysts at CBA, noting the dollar’s role as the world’s reserve currency made it a countercyclical hedge for investors.

“This means the dollar can rise because of the deteriorating global economic outlook, irrespective of the high likelihood the U.S. is also in recession.”

The dollar’s retreat had provided a fillip for gold, but fresh selling emerged on Monday as investors were forced to liquidate profitable positions to cover losses elsewhere. The metal was last off 0.23% at $1,613.6 an ounce.

Oil prices were again under water as Saudi Arabia and Russia showed no signs of backing down in their price war even as global transport restrictions hammered demand.

Brent crude LCOc1 futures lost $1.42 to $23.51 a barrel, while U.S. crude CLc1 fell 83cents to $20.67.

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Asia shares rise on more stimulus hopes but dollar loses steam

TOKYO (Reuters) – Asian stocks rose on Friday as investors wagered policymakers will roll out more stimulus measures to combat the coronavirus pandemic after U.S. unemployment filings surged to a record.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2%. Australian shares gave up gains to fall 1.09%, but Japan’s Nikkei rose 1.44%.

E-Mini futures for the S&P 500 reversed course and fell 0.95% in Asia following three consecutive days of gains in the S&P 500 on Wall Street.

The dollar nursed losses against major currencies as central banks’ steps to solve a dollar shortage in funding markets started to gain traction.

The U.S. House of Representatives is expected to pass a $2 trillion stimulus package later on Friday that will flood the world’s largest economy with money to stem the damage caused by the pandemic.

The U.S. Federal Reserve has already slashed rates to zero and launched quantitative easing. The Fed will also take the unprecedented step of offering a direct backstop for corporate loans.

The United States is now the country with the most coronavirus cases, surpassing even China, where the flu-like illness first emerged late last year. Policymakers may need to offer more stimulus as the virus slams the brakes on economic activity and increases healthcare spending.

“I’m not sure what measures are left, but the reaction in stocks shows some people hoping for more stimulus thought the market was a little oversold,” said Yukio Ishizuki, FX strategist at Daiwa Securities in Tokyo.

“Currencies tell a different story. The dollar is the lead actor. The mad rush to buy dollars due to liquidity concerns is starting to fade.”

The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the virus pandemic ground the country to a sudden halt, data showed on Thursday.

The jobless blowout was announced shortly after Fed Chairman Jerome Powell said the United States “may well be in recession”, an unusual acknowledgement by a Fed chair that the economy may be contracting even before data confirms it.

Global equity markets took the data in their stride, partly as most central banks have already aggressively eased policy and governments are backing this up with big fiscal spending.

Chinese shares, battered this month because of the virus, rose 0.8% on Friday. Shares in South Korea, another country hit hard by the pandemic, jumped by 1.62%.

Leaders of the Group of 20 major economies pledged on Thursday to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus.

CURRENCY MARKET

In the currency market, the greenback fell 0.89% to 108.64 yen in Asia, on pace for a 2% weekly decline.

The dollar was also headed for weekly declines against the Swiss franc, pound, and euro.

The U.S. currency’s fall after two weeks of gains suggests that the Fed’s efforts to relieve a crunch in the dollar funding market are working, some analysts said.

The yield on benchmark 10-year Treasury notes rose slightly in Asia to 0.8160%, while the two-year yield edged up to 0.2809%.

Yields were still headed for a weekly decline, taking cues from the Fed’s extraordinary steps to bolster markets and the $2 trillion stimulus package.

U.S. crude ticked up 2.08% to $23.07 a barrel. Brent rose 1.14% to $26.64 per barrel. Energy markets have been caught in a tug-of-war between hopes for stimulus spending and worries about excess oil supplies.

Gold, normally bought as a safe haven, was slightly lower. Spot gold fell 0.44% to $1,626.16 per ounce.

Gold market participants remained concerned about a supply squeeze after a sharp divergence between prices in London and New York. The virus has grounded planes used to transport gold and closed precious metal refineries.

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Asian stocks scratch gains but lose steam on U.S. job jitters

SINGAPORE (Reuters) – Asian stocks eked out gains on Thursday, but the week’s rally lost steam as investors seemed torn between relief at the agreement of a huge U.S. stimulus package and dread over a likely spike in jobless claims and coronavirus cases.

After last-minute negotiations, the Senate backed a $2 trillion bill aimed at helping workers and industries hurt by the pandemic. Yet concern has already turned to whether that will be enough to cushion a heavy economic blow.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3% but regional performances were patchy.

The Nikkei snapped three days of gains with a 3.5% drop, while Australia’s benchmark rose for a third day – its longest winning streak in six weeks.

Currency markets also hinted at the sense of uneasiness – the risk-exposed Australian dollar sank, the safe haven yen rose, but so too did many emerging market currencies.

Oil fell and U.S. and European stock futures turned red after bobbling into positive territory during the session. E-mini futures for the S&P 500 last traded down 1% and EuroSTOXX 50 futures were down 1.4%.

“After this crazy three weeks of trading we are now coming to a more static state,” said Margaret Yang, market analyst at brokerage CMC Markets in Singapore. “Bulls and bears are fighting each other, with equal strength.”

Global markets have lost about a quarter of their value in the last six weeks of virus-driven selling.

The passage of the stimulus bill through the Senate, as expected, brushed Asian indexes slightly higher but gains were marginal and ephemeral. The Hang Seng and Shanghai Composite soon returned to negative territory.

The package will now head to the House of Representatives, which could vote sometime this week. Before that will come a glimpse of the scale of economic destruction already wrought.

Initial jobless claims in the United States are due at 1230 GMT, with forecasts in a Reuters poll ranging from 250,000 claims all the way up to 4 million.

RBC Capital Markets economists had expected a national figure over 1 million, but say “it is now poised to be many multiples of that,” as lockdowns drive deep layoffs.

“Something in the 5-10 million range for initial jobless claims is quite likely,” they wrote in a note. That compares to a 695,000 peak in 1982.

Citi Private Bank said the peak total could reach 15-18% of the total U.S. workforce, some 25 million people.

U.S. Federal Reserve Chairman Jerome Powell is also due to appear on NBC television around 1100 GMT.

‘WE DON’T KNOW HOW BAD IT COULD BE’

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the U.S. government spends annually.

But it comes against a backdrop of bad news as the coronavirus spreads and more signs of economic damage.

“There has been so much stimulus thrown at this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney. “But the positivity related to it is really just sentiment,” she said. “We don’t know how bad it could be.”

Dire data from Singapore offered the latest clue, with the economy suffering its biggest contraction in a decade in the first quarter and factories posting their largest output drop since records began in 1983.

Tokyo’s governor asked residents to avoid going out and to “act with a sense of crisis”. Spain’s coronavirus death toll has overtaken China’s and more than 21,000 people have died globally.

In currencies, the mood drove weakness in both the U.S. dollar and the riskier Aussie.

The Australian dollar was last down 0.6% at $0.5924 and 1% weaker on the rising yen.

The safe-haven yen rose 0.4% to 110.70 per dollar and the softer greenback buoyed emerging market currencies, with MSCI’s emerging markets currencies index touching a one-week high.

Oil edged lower with fears of plunging demand just outweighing stimulus hopes. U.S. crude futures slipped 30 cents to$24.19 per barrel and Brent crude futures fell 0.5% to $27.26.

Gold fell 0.7% to $1,602.00 per ounce.

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Investors look to 2008 for guidance on when to jump back in

LONDON (Reuters) – Investment banks are dusting off models from the 2008 financial crisis to gauge the right time to buy back into stock markets that have plunged 30% from their February record highs because of the coronvirus crisis.

That inflection point is not easy to model when the virus is still spreading rapidly across Europe and the United States.

But the U.S. government’s $2 trillion in fiscal stimulus, coming on top of unprecedented measures from the U.S. Federal Reserve and other central banks on Tuesday triggered one of the sharpest global equity market rallies in decades.

Wall Street’s so-called fear gauge, the Cboe Volatility Index has also fallen from its highs.

For some, the signals for a reversal are in place.

Veteran investor Bill Ackman told investors in his listed Pershing fund he had turned increasingly positive on stocks and credit, and taken off hedges he put in place in early March when markets first started cratering.

He said Pershing was “redeploying our capital in companies we love at bargain prices that are built to withstand this crisis”.

Goldman Sachs’ view was that this week’s record stock market rally had been led by “underweight” sectors, suggesting many funds had been covering short positions. Indeed, energy, travel and auto stocks were Tuesday’s biggest gainers.

At Morgan Stanley, Andrew Sheets, head of cross-asset strategy, said in these situations, including in 2008, markets often trough well before the crisis actually ends.

From the 2008 trough there followed a decade of stunning gains that added more than $25 trillion to global equity value.

“(The market) won’t need to see a peak in U.S. (Covid) cases, it just needs to see some confirmation of the path and it nees to be happy with the path,” Sheets said.

But so far he remains underweight credit and has only marginally upped equity exposure.

GETTING IT RIGHT

JPMorgan says there is more than one way of measuring it, especially given the unique nature of the crisis which hit the real economy first, with financial markets following.

John Normand, JPM’s head of cross-asset strategy said one model suggested now is the time to re-enter — a quarter before a recession is likely to end. His view is that the coronavirus-induced recession will be “undoubtedly deep but also possibly the shortest-ever.”

Normand also said investors could wait for “green shoots” or evidence of an actual upturn — reflected in a trough for JPMorgan’s global Purchasing Managers Index.

A third, valuation-based model triggers a “Buy” signal when risk-premia across several asset classes fall to certain “deep value” thresholds.

Norman said the latter two models were not yet signalling it was time to buy.

Notably, U.S. and European stock valuations based on a 12-month forward price-to-earnings ratios now have dipped well below historical averages, according to Refinitiv data.

Meanwhile, credit markets are still sending out distress signals — yields on junk-rated U.S. bonds are around 10% currently compared to 6% a month ago, meaning many companies may find it hard to service debt.

In Europe, an index of European credit default swaps, ITEXO5Y=MG that measure the default risk of a basket of sub-investment grade companies, is off its peaks but remains elevated at around 520 basis points, almost double end-February levels.

The volatility index’s (VIX) 30% drop from recent peaks is a clear positive for riskier assets. But if 2008 is any guide, its decline may not yet signal the market trough. In 2008, the VIX retreated from highs in October, but markets took another five months to bottom out.

The recession in 2008 was a long one — some economists reckon this time a turnaround in global growth will come by the third quarter.

Yet some also warn that markets are only now coming to grips with how severe a potential downturn could be.

“We … haven’t fully appreciated how far this recession will go,” said Andrea Cicione, head of strategy at TS Lombard, in London. Some of her concerns center on potential second-round effects such as rising unemployment and companies slashing their capital expenditures.

For now, the trajectory of the coronavirus and its economic fallout will play a key role in determining the market’s path, said Randy Watts, chief investment strategist at William O’Neill+Co.

“In the short run, the market is still going to stay very volatile until one of three things happens – either the number of deaths and the number of new infections in the U.S., peak, there is some kind of a cure or vaccine developed or until the U.S. economy begins to reopen,” he said.

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GLOBAL MARKETS-Asian stocks rebound, Fed soothes with boundless QE

* Asian stock markets : tmsnrt.rs/2zpUAr4

* S&P 500 futures bounce in Asia, Nikkei jumps

* Investors relieved as Fed pledge eases bond market stress

* Dollar off peaks on promise of bottomless liquidity

* Factory surveys to show extent of economic damage

By Wayne Cole

SYDNEY, March 24 (Reuters) – Asian stocks rallied on Tuesday as the U.S. Federal Reserve’s promise of bottomless dollar funding eased painful strains in financial markets, even if it could not soften 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 by 2.7% and Japan’s Nikkei 4.7%. If sustained it would be the biggest daily rise for the Nikkei since late 2016.

Europe also looked a shade brighter as EUROSTOXXX 50 futures climbed 2.6% and FTSE futures rose 2.9%.

MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 3.5%, to more than halve Monday’s drop.

South Korea’s ravaged market climbed 5.2% after the government doubled a planned economic rescue package to 100 trillion won ($80 billion).

In its latest mold-breaking step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and municipal bonds.

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

“What they did, more than just starting up some new programs, was to drive home they are willing to do whatever it takes,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets. “We would not call into question their resolve.”

“We have every expectation that where a facility/program has some dollar limitation, that it is just the starting point,” he added. “Upsizing is a foregone conclusion. The spigots are open. Now let’s see how well they work.”

The plan helped calm nerves in bond markets where yields on two-year Treasuries hit their lowest since 2013. Ten-year yields were at 0.82%, from last week’s peak of 1.28%.

Still, analysts cautioned it would 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.

Economists at JPMorgan expect claims to surge by a record 1.5 million and forecast a 14% annualised fall in U.S. gross domestic product for the second quarter. They see European GDP down almost 24% and Latin America 12%.

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.

Surveys from Japan showed its services sector shrank at the fastest pace on record in March and factory activity at the quickest in about a decade.

DOLLAR OFF HIGHS

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.”

For now, the prospect of massive U.S. dollar funding from the Fed saw the currency ease back to 110.22 yen from Monday’s one-month top of 111.56.

The euro bounced 0.7% to $1.0799, up from a three-year trough of $1.0635. The dollar index slipped 0.4% to 101.720 and off a three-year peak of 102.99.

Commodity and emerging market currencies that suffered most during the recent asset rout also benefited from the Fed’s steadying hand. The Australian dollar climbed 1.6% to $0.5925 and away from a 17-year low of $0.5510.

Gold surged in the wake of the Fed’s pledge of yet more cheap money, and was last up 1.5% at $1,576.61 per ounce having rallied from a low of $1,484.65 on Monday.

There were also signs that gold metal itself was in short supply with the premium on exchange for physical blowing out.

Oil prices also bounced after recent savage losses, with U.S. crude up 82 cents at $24.18 barrel. Brent crude firmed 64 cents to $27.67.

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GLOBAL MARKETS-Asia stocks rally, Fed launches limitless QE against economic reality

* Asian stock markets : tmsnrt.rs/2zpUAr4

* S&P 500 futures bounce in Asia, Nikkei jumps

* Investors relieved as Fed pledge eases bond market stress

* Treasury yields fall, drag down yields globally

* Dollar off its peaks, supported by liquidity flows

By Wayne Cole

SYDNEY, March 24 (Reuters) – Asian stocks rallied on Tuesday as the U.S. Federal Reserve’s sweeping pledge to spend whatever it took to stabilise 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 by 1.9% and Japan’s Nikkei by 4.9%.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.2%, though that followed a drop of almost 6% on Monday. South Korea 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 programme 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%.

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 after hitting a one-month top at 111.59 on Monday, while the euro inched up to $1.0754 from a three-year trough of $1.0635.

The dollar index stood at 102.120, 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 having rallied from a low of $1,484.65 on Monday.

Oil prices also bounced after recent savage losses, with U.S. crude up 64 cents at $24.00 barrel. Brent crude firmed 53 cents to $27.56.

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GLOBAL MARKETS-Asia on ropes as S&P500 slides, dollar in demand

* Asian stock markets : tmsnrt.rs/2zpUAr4

* S&P 500 futures fall 5% to be limit down

* Asian shares set for more losses, oil falls anew

* US dollar firm on safe-haven, high liquidity status

* More countries shut businesses, tell people to stay home

By Wayne Cole

SYDNEY, March 23 (Reuters) – Asian markets were set for another turbulent week on Monday as more countries all but shut down in the fight against the coronavirus, threatening to overwhelm policymakers’ frantic efforts to cushion what is clear to be a deep global recession.

In a taste of what was to come, E-Mini futures for the S&P 500 dived 5% right at the start of Asian trading to be limit down. Nikkei futures sank 5.8%.

Oil was not far behind as mass bans on travel worldwide crushed demand for fuel. Brent crude futures slid a further $1.90 to $25.01 a barrel in chaotic trade, while U.S. crude shed $1.58 to $21.05.

Analysts fear the collapse in oil and other commodity prices will set off a deflationary wave making it harder for monetary policy easing to gain traction as economies shut down.

Nearly one in three Americans were ordered to stay home on Sunday to slow the spread of the disease, while Italy banned internal travel as deaths there reached 5,476.

U.S. President Donald Trump went on TV to approve disaster deceleration requests from New York and Washington, while St. Louis Federal Reserve President James Bullard warned unemployment could reach 30% unless more was done fiscally.

U.S. stocks have already fallen more than 30% from their mid-February and even the safest areas of the bond market experiencing liquidity stress as distressed funds are forced to sell good assets to cover positions gone bad.

“It would be a brave, or foolish, man to call the bottom in equities without a dramatic medical breakthrough,” said Alan Ruskin, head of G10 FX strategy at Deutsche Bank.

Also needed would be evidence that China can re-emerge from the virus, without reigniting infections and, that other major economies have hit the inflection points for infection rates, he added.

“Even were social distancing to subside at the earliest plausible dates in Europe and the U.S., it will have done extraordinary damage to confidence in a host of key sectors.”

The mounting economic toll led to a major rally in sovereign bonds late last week, with efforts by central banks to restore liquidity in the market allowing for more two-way trade.

Yields on the benchmark U.S. 10-year note dived all the way to 0.84% on Friday, having been as high as 1.28%, an enormous swing that has become all too common.

Treasury futures extended the bounce on Monday by climbing more than a full point.

In New Zealand, the central bank announced its first outright purchase of government paper aiming to inject much-needed liquidity into the local market.

In currency markets, the first instinct on Monday was to dump those leveraged to global growth and commodity prices, sending the Australian dollar down 1.4% to $0.5717.

The U.S. dollar was again buoyed by safe-haven flows and edged up 0.2% on the yen to 111.03, while the euro eased 0.3% to $1.0662.

Against a basket of currencies the dollar gained 0.4% to 102.810.

The steady rise in the dollar undermined gold, which slipped 0.5% to $1,490.07 per ounce.

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Wall Street braces for another bleak week, with coronavirus risks amplified

NEW YORK (Reuters) – Wall Street analysts and investment managers expect another rough week for U.S. markets, as coronavirus cases and deaths increase in major cities and lawmakers continue to battle over an economic aid package in Washington.

U.S. stocks have already fallen more than 30% from their mid-February peak as the pandemic has spread, with even the safest areas of the bond market experiencing liquidity stress in a market rout not seen since the 2008 financial crisis.

Even so, the pain may not be over yet, analysts and portfolio managers told Reuters on Sunday.

“This is a biological event,” said Nela Richardson, investment strategist at Edward Jones in St. Louis. “The market is a mere symptom of the global pandemic.”

Over the weekend, several states expanded their restrictions on business operations or non-essential movement by citizens. Nearly one in four Americans is now being ordered to stay home, with bustling cities such as New York and Las Vegas all but shut down.

The number of U.S. coronavirus cases rose to more than 33,000 as of Sunday afternoon, up from about 3,600 a week earlier, according to Reuters’ tally. At least 390 people have died. The number of cases in New York City skyrocketed, with Mayor Bill de Blasio saying hospital staff are 10 days away from running out of crucial supplies.

(Click here here for a graphic of U.S. coronavirus cases.)

The decline in economic activity will obviously have a severe impact on the U.S. economy and corporate profits, but market strategists and economists said it is difficult to predict just how severe.

Three major factors are how much aid the federal government will inject into the economy, how effective the aid package’s structure will be and how long it takes for the number of new cases to start declining in the United States – also known as “flattening the coronavirus curve.”

On Sunday, U.S. Treasury Secretary Steven Mnuchin said Congress was close to finalizing a relief package that would offer families a one-time $3,000 payment and markets another $4 trillion to support the economy. But lawmakers were still arguing about the particulars, and it was not clear when such a support measure might pass.

While fiscal stimulus and monetary policy measures would aid greatly in an eventual recovery of the U.S. economy, it would take time for them to have a large impact on Wall Street’s near-term performance, Richardson said.

But if disagreements in Congress were to delay the passage of a relief package, that could further sour investor sentiment heading into Monday’s market open, said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.

“If that headline holds, that’s probably going to be negative for the market,” he said.

Searching for a bottom, some analysts said things could eventually get as bad as the 2008-2009 meltdown, when stocks fell 57% and quarterly U.S. gross domestic product fell as much as 4% year-over-year.

That is the worst-case scenario for Barclays, according to a report on Friday by Maneesh Deshpande, the bank’s head of U.S. equity strategy and global equity derivatives strategy.

Scott Minerd, global chief investment officer at Guggenheim Partners, is not so sure.

“There’s good reason to believe that this is potentially worse than the financial crisis,” Minerd said in his weekly report.

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New York order spooks Wall Street, offsets calm from policy efforts

NEW YORK (Reuters) – Wall Street retreated on Friday after New York ordered residents to stay home, rattling investors who had welcomed this week’s fiscal and monetary measures to counter the coronavirus shock and help revive the safe-haven appeal of bonds and gold.

Gold rose more than 3% at one point as it regained a bit of its flight to safety luster and the yield on U.S. Treasuries fell as emergency measures aimed at stabilizing financial markets briefly took hold after days of sharp volatility.

The policy efforts broke a global scramble for cash that had boosted the dollar this week and helped staunch the steep nosedive in global equity markets.

Stocks had gained on Thursday in less-tumultuous trade and were trading higher on Wall Street before New York Governor Andrew Cuomo said he would mandate all non-essential workers to stay home and all non-essential businesses close. [nL1N2BD0W7]

Cuomo pleaded for more medical personnel and supplies to treat coronavirus cases that could overwhelm the hospitals in New York, a state of nearly 20 million.

Cuomo’s remarks “spooked people, it spooked the market,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “It’s all fear, fear of more negative headlines.”

On Wall Street, the Dow Jones Industrial Average fell 453.67 points, or 2.26%, to 19,633.52. The S&P 500 lost 52.29 points, or 2.17%, to 2,357.1 and the Nasdaq Composite dropped 85.82 points, or 1.2%, to 7,064.76.

U.S. stocks had been poised for their first two-day gain since Wall Street tumbled from all-time highs in February to their sharpest decline in three decades.

In yet another response to tight markets, six major central banks announced a coordinated action to enhance liquidity in the dollar by increasing the frequency of their currency swap operations. [nFWN2BD128]

Markets have been reassured by the speedy central bank action this week but the full fiscal response from governments remains to be seen and is critical, said Kristina Hooper, chief global market strategist at Invesco in New York.

“The dash to cash we saw earlier this week has been relaxed a bit. Now Treasuries are once again perceived to be a safe-haven asset class,” Hooper said. “That’s good as it suggests at least a dialing down of risk-off sentiment.”

The lifespan of the pandemic is dictated by three components, fiscal, monetary and the most important, health, Hooper said. “The sooner we can get to a complete lockdown, the sooner we can get past this,” she said.

Norway’s central bank became the latest to cut interest rates [nO9N28E00M], while China was set to unleash trillions of yuan of fiscal stimulus to revive its economy. [nL3N2BD0KK]

The dollar eased after currencies, from the Australian dollar to the British pound, tumbled to multi-year lows earlier this week.

MSCI’s U.S.-centric gauge of stocks across the globe shed 0.48%, while emerging market stocks rose 4.96%.

U.S. gold futures settled 0.4% higher at $1,484.6 an ounce.

The dollar is up about 3.5% against a basket of currencies through a week when investors liquidated everything from stocks to bonds to gold and commodities to raise cash. The dollar hit a three-year peak of 102.99 in early Asian trading.

The dollar index fell 0.204%, with the euro down 0.28% to $1.066.

The Japanese yen weakened 0.44% versus the greenback at 111.22 per dollar.

U.S. home sales surged to a 13-year high in February, but the housing market recovery is likely to be derailed by the coronavirus outbreak, which has unleashed a wave of layoffs and left the American economy headed toward recession. [L1N2BD0QT]

The global economy already is in recession as the hit to economic activity from the pandemic has become more widespread, according to economists polled by Reuters. [nL4N2BC3BN]

Oxford Economics cut its global growth forecast for 2020 to zero, making this year the second-weakest for the world economy in almost 50 years of comparable data, with only 2009, in the depths of the global financial crisis, being worse.

European shares jumped as a wave of fiscal and monetary stimulus tempted investors back into equity markets. The broad pan-European STOXX 600 index rose 1.82%.

But stocks pared some of their gains as fears over the economic shock from the coronavirus quashed initial optimism.

Britain’s FTSE rose 0.8%, Germany’s DAX gained 3.7%, and France’s CAC 40 rose 5%.

The European Central Bank’s 750 million-euro emergency bond purchase scheme, announced on Wednesday, has boosted southern European debt, alleviating some concern over how already heavily indebted states would finance the fiscal measures needed to defend against coronavirus.

Investors in Asia were happy that Wall Street had not plunged again. South Korean shares bounced 7.4%, though that still left them down more than 11% for the week.

Australia’s beleaguered market eked out a 0.70% gain, and futures for Japan’s Nikkei were trading up at 17,710, compared with the cash close of 16,552.

Oil prices fell for the fourth week in a row, with U.S. crude on track for its worst week since 1991, as the coronavirus outbreak knocked the demand outlook and Moscow rejected U.S. intervention in its price war with Saudi Arabia.

West Texas Intermediate fell $2.69 to settle at $22.53 a barrel while Brent crude futures fell $1.49 to settle at $26.98 a barrel.

Euro zone bond yields tumbled on Friday as risk sentiment picked up to support Southern European bonds,

Relatively calm trading in U.S. Treasuries early in the session returned to the volatile patterns seen earlier this week after Cuomo said he would issue his executive order.

Benchmark 10-year U.S. Treasury notes fell 15 basis points to yield 0.9803%.

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