Key Points
- China’s 1-year loan prime rate (LPR) was left unchanged at 3.85%1
- STAT said early data from Moderna Inc’s COVID-19 vaccine was insufficient.2
- The United States on Tuesday extended restrictions on cross-border travel with Canada and Mexico. 2
- Spot gold prices were little changed and not far from Monday’s more than 7-1/2-year high 2
- Japan is on course for its worst postwar economic slump 3
- Asian equities are expected to trade within a limited range in the near term, 4
- The UK just sold its first ever negative-yielding government bond 5
- the U.S. Senate passed legislation that could restrict Chinese companies from listing on American exchanges
The moves came as China’s 1-year loan prime rate (LPR) was left unchanged at 3.85%. That was largely in line with expectations from a Reuters survey of traders and analysts, where a majority forecasted no changes in either rate at the monthly fixing on Wednesday. 1
Economic indicators pointed to more signs of recession. 2
Data showed U.S. homebuilding dropped by the most on record last month and permits for future construction tumbled, fuelling fears the coronavirus pandemic would lead to the deepest economic contraction in the second quarter since the Great Depression. 2
The downbeat findings came after data this week showed the world’s third-largest economy slipped into its first recession in 4-1/2 years last quarter. 3
The depth of despair in the business sector reinforces analysts’ expectations that Japan is on course for its worst postwar economic slump, with a Reuters poll forecasting an annualised GDP decline of 22% in the current quarter. 3
March over the uncertainty from the coronavirus pandemic, the demand for U.S. dollars surged. That demand came from a variety of sources including banks, investors selling dollar-based assets and issuers of dollar-denominated debt. 4
While Asian equities over the last 15 years have moved largely in tandem with their earnings estimates, the “present situation is an anomaly,” where the earnings outlook has weakened sharply but the market is staying strong, according to BNP Paribas’ head of equity research for Asia-Pacific, Manishi Raychaudhuri. 4
“It appears, either the market is expecting a V-shaped recovery in earnings estimates or it is ignoring 2020 (earnings per share) estimates for now and looking at 2021,” Raychaudhuri said 4
In addition, he said South Asian countries will likely see bigger negative impact in terms of earnings and the outlook is unlikely to improve until there are “credible signs of (the) virus coming under control.” 4
The U.K. borrowed at a negative interest rate for the first time on Wednesday, amid growing fears of a deep global recession and expectations of further bond buying action from central banks.5
the U.S. Senate passed legislation on Wednesday that could restrict Chinese companies from listing on American exchanges or raise money from U.S. investors, unless they abide by Washington’s regulatory and audit standards.
Tom Baldwin