Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Central banks breathe life into markets

Central banks breathe life into markets

Trade of the Day: Stocks, futures in broad relief rally on stimulus hopes; US Treasury yields plummet as rate cut eyed.Financial markets roared back to life on Monday on intervention expectations from the central banks of the world’s three biggest economies, giving investors hope. Bank of Japan (BoJ), joined the US Federal Reserve and the People’s Bank of China in promising economic support to offset the financial damage from the coronavirus. The Bank of Japan said it will “closely monitor future developments, and will strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases.”

That fueled a rally in markets starting with Japan’s Nikkei 225 index, which rose 0.95%, while the CSI 300 index surged 3.29% and the Hang Seng Index climbed 0.62%. The MSCI Asia Pacific ex-Japan index added 0.92%.

“We suspect that the BoJ’s response to the coronavirus will mostly consist of liquidity provision to banks and a renewed acceleration of its ETF purchases. We are not forecasting a cut in the bank’s short-term policy rate,” said Capital Economics in a report.

This added to the optimism sparked by the US central bank, which said it would “use our tools and act as appropriate to support the economy.”

China’s central bank said small- and medium-sized businesses nationwide with principal or interest due between January 25 and June 30 can delay repaying their debt without attracting penalties.

This followed a record low reading of the Caixin to 40.3 for February, the lowest level since the survey began in 2004, falling steeply from January’s 51.1 and missing the analyst forecast of 45.7.

“Production halts and severe staff shortages had contributed to intense capacity pressures during February, as signaled by the fastest rate of backlog accumulation for almost 15 years,” said Bernard Aw, principal economist at IHS Markit. “The timing as to when the coronavirus-related restrictions will be relaxed is critical to restoring China’s manufacturing productive capacity – and therefore engendering a recovery.”

But he predicted a recovery next month.

“Nevertheless, the current situation is expected to improve as soon as in March with an increasing number of manufacturing enterprises resuming work.”

The futures on the S&P 500 Index rose 0.7% and Nasdaq 100 Index futures jumped 0.9%, but European stocks were down with the Stoxx Europe 600 falling 0.2% as investors worried about the spread of the virus in Italy, Spain, Germany and France.

The IHS Markit US Manufacturing PMI fell to 50.7 in February from 51.9 in January, but analysts saw some signs of improvement.

“As expected, the release highlights supply-chain disruptions due to the impact of the coronavirus in China, but interestingly the survey indicated stronger optimism in future production. Whether this optimism will manifest into future output will likely be dependent on the spread of the virus and its impact on supply and demand,” said Rob Mangrelli, director at Chatham Financial.

“Markets have already priced in an accelerated pace of Fed rate cuts over the last two weeks and will continue to assess the impact of the virus along with the potential monetary policy response as additional tier 1 economic data such as services PMI and nonfarm payrolls are released later this week.”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×