Asia stocks opened with modest gains on Monday as investors weighed further signs of positive developments in the global fight against the coronavirus. Coronavirus deaths slowed the most in more than a month in Spain, Italy, and France, while fatalities reported in the United Kingdom (UK), and New York, United States (US) were the lowest since the end of March.

Equity benchmarks in Japan and South Korea ticked higher after US stocks ended firmer on Friday. But US stock futures dipped on Sunday night. Japan’s yen was steady as traders awaited a key Bank of Japan (BoJ) policy meeting.

The Federal Reserve joins the BoJ and the European Central Bank announcing policy decisions this week as the battle against the pandemic continues with some countries proceeding on steps to relax lockdown measures, Bloomberg reported. Several major economies will release GDP numbers.

This week, the US earnings season continues, updating guidance on full-year expectations amid the coronavirus pandemic. Meanwhile, central bank policy meetings in the US, Eurozone, and Japan will be keenly watched as well as GDP data for the US and Eurozone and PMI survey for China. Other releases include US personal income and outlays, ISM Manufacturing PMI; Eurozone business survey and inflation; Japan consumer confidence and industrial output; and Australia inflation data.

This week will be huge from a macro data perspective and the extent to which COVID-19 has floored the global economy. Meantime, New York Governor Andrew Cuomo sketched out a phased-in reopening that begins with construction and manufacturing. That could start as soon as May 15, he said, probably upstate before the New York City area. Italy and Spain, Europe’s two hardest-hit countries, along with neighboring France, all signaled tentative moves to open up their economies.

US stocks rebounded on Friday last week (April 24) as the oil rally continued with moderate gains, and markets weighed the prospects of a potential coronavirus treatment from Gilead. While European stocks closed lower on Friday as fears of a lasting hit from the coronavirus weighed on sentiment, after Gilead Sciences Inc.’s antiviral drug remdesivir to treat COVID-19 failed its first clinical trial.

European leaders agreed Thursday to build a massive emergency fund to help the bloc’s economy amid the pandemic but failed to provide any details of the program. On the economic data front, German business morale tumbled to an all-time low in April.

In Asia, Japanese stocks opened in the green on Monday, as investors’ concern over the coronavirus outbreak in the country eased. Meantime, the Japanese government is planning to increase employment subsidies to protect jobs. Japan’s government says the nation’s economy is “getting worse rapidly in an extremely severe situation” due to the coronavirus outbreak. In its monthly economic report for April, the government downgraded its assessment of the economy for the second straight month.

China shares closed lower on Friday amid lingering coronavirus worries. Still, losses were limited as The People’s Bank of China (PBOC) lowered the interest rate on its targeted medium-term lending facility (TMLF). The one-year interest rate on the TMLF was cut by 20 basis points to 2.95% from 3.15% previously.

On commodities, West Texas Intermediate crude slipped 2.6% $16.50 a barrel, and Nymex’s crude oil fell 3.54% to US$16.24 per barrel. US crude dropped as much as 2% to below $17 a barrel during the Asian trading session as demand remained subdued in a market overrun by supply. Gold was at $1,725.43 an ounce, down 0.2%, but the metal remains above the key $1,700 mark on expectations that major central banks may have to do more to limit the recession and speed the recovery from the coronavirus pandemic.

At Jakarta bourse, the composite index of the Indonesia Stock Exchange (IDX) lost 2.1% to close at 4496 on Friday last week, due to the selloff by foreign investors. They booked a net sell of Rp1.09 trillion, bringing the year-to-date net sell to Rp17.54 trillion. The rupiah, meanwhile, strengthened to Rp15,553 against the US dollar on Friday.

Bank Indonesia said that it continued to monitor the latest economic conditions in Indonesia—the impact of COVID-19 in particular. Foreign inflows to Government securities (SBN) were recorded at Rp1.4 trillion in the April 20-23 period. It indicates that confidence in Indonesia—primarily investment in fixed income portfolios—is gradually increasing.

 

By Yohannes Obor