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GLOBAL MARKETS-Asia shares take a breather, China cuts medium-term rates

Published 15/04/2020, 03:36 pm
© Reuters.
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Nikkei, S&P futures ease after sharp rally

* China cuts medium term rates by 20 bps

* IMF flags worst global recession since 1930s

* Some U.S. states looking to gradually restart business

* Oil steadies on talk of stockpile building

By Wayne Cole and Koh Gui Qing

SYDNEY/NEW YORK, April 15 (Reuters) - Asian share markets took a breather on Wednesday as warnings of the worst global recession since the 1930s underlined the economic damage already done even as some countries tried to re-open for business.

China moved again to cushion its economy, cutting a key medium-term interest rate to record lows and paving the way for a similar reduction in benchmark loan rates. not unexpected, it did help MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edge up 0.2% to a fresh one-month top.

Shanghai blue chips .CSI300 , however, eased 0.3%. Japan's Nikkei .N225 dipped 0.2%, though that followed a 3% jump the previous session.

E-Mini futures for the S&P 500 ESc1 fell 0.5%, following a 3% rise in New York. EUROSTOXX 50 futures STXEc1 and FTSE futures FFIc1 were both barely changed.

"Flattening infection curves and the thoughts of more stimulus have lifted all boats," said Stephen Innes, chief global market strategist at AxiCorp.

"However, appearances can be deceiving as behind the headlines lie the most gnarly storm clouds building, suggesting there is still much to be worried about."

Even as some U.S. states considered relaxing restrictions, the country's death toll rose by at least 2,228, a single-day record, according to a Reuters tally. Donald Trump responded by saying some states could still open shortly or even immediately. He also temporarily halted funding to the World Health Organization, saying it should have done more to head off the pandemic. economic damage has already been done, with the International Monetary Fund predicting the world this year would suffer its steepest downturn since the Great Depression of the 1930s. Kasman, chief economist at JPMorgan, warned such a slowdown would take a heavy toll on corporate earnings.

"We project global profits to experience a roughly 70% peak-to-trough decline in 2020," he wrote in a note.

"Even with a projected strong subsequent rebound, global profits are expected to stand 20% below their forecasted pre-pandemic level at the end of next year."

Shares of JPMorgan Chase (NYSE:JPM) JPM.N and Wells Fargo (NYSE:WFC) & Co WFC.N both fell on Tuesday as the banks set aside billions of dollars to cover potential loan losses from the pandemic.

BONDS STILL BID

Bond markets are still wagering on tough times ahead, along with unlimited support from central banks and a disinflationary pulse from lower energy prices. US/

Yields on U.S. 10-year Treasuries US10YT=RR have settled around 0.74%, more than 100 basis points below where they started the year.

That drop in yields combined with the vast amounts of cash being created by the Federal Reserve has been a drag on the U.S. dollar in recent sessions.

Currencies leveraged to global growth, including the Australian and New Zealand dollars, have led the way higher though the dollar has also lost ground to its major peers.

Early Wednesday, the dollar was down at 107.07 yen JPY= having shed 0.5% overnight, while the euro firmed to $1.0980 EUR= . The dollar index =USD was near its lowest in two weeks at 98.854.

The dollar pullback and a tide of cheap money from central banks has burnished gold prices, with the metal hitting its highest since late 2012. It was last at $1,724 an ounce XAU= . GOL/

In energy markets, oil prices steadied on hopes for purchases by consumer countries for their strategic stockpiles on a scale not before seen. O/R

U.S. crude CLc1 was last up 32 cents at $20.43, having shed 10% on Tuesday, while Brent crude LCOc1 edged up 16 cents to $29.76 in erratic trade.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes)

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