Business Maverick

Business Maverick

March 11 : Five Things You Need to Know to Start Your Day

(Image: Adobestock)

Asia futures are modestly higher after a strong rebound on Wall Street. It’s too late to fully contain the coronavirus in some parts of the U.S. And emergency rate cuts are looming for Asia, but will central banks pull the trigger? Here are some of the things people in markets are talking about today. 

Relief At Last

U.S. stocks rebounded from the worst rout since the financial crisis on Tuesday; ahead of Asia’s open, futures were modestly higher in Japan, Hong Kong and Australia, and U.S. equity futures opened lower. The 10-year Treasury yield soared above 0.8% following Monday’s plunge and the yen declined through 105 per dollar. Oil was stable after rising 10%. On Wall Street, the biggest jump since 2018 came on expectations the Trump administration will implement stimulus measures to counter the economic impact from the coronavirus, and the S&P 500 Index surged almost 5% by the end of another wild trading day. President Donald Trump and his team are looking at measures including cutting payroll taxes and aiding ailing businesses like airlines and cruise operators. Still, not everyone believes the rebound will stick. Goldman Sachs strategists expect stocks to stage a powerful recovery from their worst sell-off since the 2008 financial crisis, but only after suffering more declines first.

Can’t Contain

The window for fully containing the coronavirus has passed in some parts of the U.S. and the White House will roll out plans to mitigate its impact later Tuesday local time, Centers for Disease Control and Prevention Director Robert Redfield said at a hearing in Washington. “In general, we’re in a containment, blended mitigation,” Redfield said. “In some areas we’re in high mitigation.” The White House’s decision to release a plan is an acknowledgment that efforts to track down and contain individual cases have failed in some places, and that the coronavirus is spreading from person to person. New York has become one of the first U.S. states to try to limit the movement of large groups of people, while Italy is attempting a nationwide lockdown — cases have topped 10,000 there. And in the U.K., health minister Nadine Dorries has been diagnosed with the virus. Globally, 117,000 cases have been recorded and deaths exceeded 4,200. On Tuesday Chinese President Xi Jinping visited the coronavirus epicenter of Wuhan for the first time since the disease emerged, in a sign that China sees the virus under control.

Is It An Emergency Yet?

Emergency rate cuts are looming for Asia as the coronavirus continues to slams economies across the region. Central bankers across Asia Pacific must now consider whether to wait until their next scheduled policy meetings or to respond sooner to the mounting global risks from the virus outbreak, as well as the oil-price plunge. None of Asia’s central banks immediately followed the Fed’s emergency rate cut last week, but some have added liquidity. With policy meetings still some weeks away for India, South Korea and Malaysia, analysts see those countries as prime candidates to deliver off-schedule rate decisions. Much will depend on whether global markets rally and credit conditions ease, which would take the pressure off central banks to move aggressively. Here’s what Bloomberg economists have to say about Asia’s potential rate cut candidates. Meanwhile, lower rates in China are keeping bank stocks trading at a historic discount.

Mountain Of Cash

India’s largest equity hedge fund manager is hoarding cash as the market sell-off rumbles on. According to the fund, it’s too early to call the bottom to a free fall in the nation’s equity market triggered by global risk-off and local financing woes. Avendus Capital Public Markets Alternate Strategies has been unwinding its investments to raise cash holdings to the “highest in several years,” Vaibhav Sanghavi, who helps oversee the firm’s funds as co-chief executive officer, said. He declined to disclose the ratio of assets under management kept as cash. The Reserve bank of India’s seizure of beleaguered Yes Bank last week intensified the risk-off mood fueled by the spread of novel coronavirus cases across the globe. S&P BSE Sensex, the nation’s benchmark equity index, fell the most since August 2015 on Monday, while a measure of volatility in local stocks surged to its highest level in more than five years.

Offense to Defense

China is on the defensive in order to safeguard its economy… and Xi Jinping. The Chinese president has re-engineered China’s foreign policy since taking power, imploring diplomats to expand the nation’s global reach with new international organizations and a worldwide infrastructure program involving hundreds of billions of dollars. But since the new coronavirus has ravaged China, prompting nations to shun Chinese visitors and reassess supply chains, diplomats have played defense to protect the home front. That has mostly meant two things: Restoring the country’s reputation among foreign companies that manufacture and source goods in the country, and ensuring the Communist Party maintains its grip on power. For Xi, the stakes are high: Here’s why.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours.

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