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Get up to date on what's moving global markets this morning.
(Bloomberg) --
The Fed cut interest rates by half a percentage point in an emergency move. Australia’s benchmark stock index has a new leader. And it’s too late to impose travel bans in the U.S. to curb the virus there. Here are some of the things people in markets are talking about today.
The Federal Reserve slashed interest rates by half a percentage point in the first such emergency move since the 2008 financial crisis, amid mounting concern that the coronavirus outbreak threatens to stall the record U.S. economic expansion. The rate cut, which came between the central bank’s regularly scheduled meetings, was announced hours after Group of Seven finance chiefs held a rare teleconference to pledge they’d do all they can to combat the fast-moving health crisis. “My colleagues and I took this action to help the U.S. economy keep strong in the face of new risks to the economic outlook,” Fed Chairman Jerome Powell told a hastily convened press conference in Washington on Tuesday. “The spread of the coronavirus has brought new challenges and risks.” Investors weren’t impressed by either the G-7 promise or the Fed’s move. After rallying earlier in the week on anticipation of action, the S&P 500 index fell more than 3% while the 10-year Treasury yield plunged below 1%. Traders are betting that the Fed will have to do more, with the futures markets pricing additional easing later this year. Here’s what the market didn’t like about Powell’s scant tools.
Stocks in Asia are set to resume declines after the emergency Federal Reserve rate cut sent Treasuries surging and U.S. shares slumping on concern it won’t be enough to cushion the economic hit from the spreading coronavirus. The yen and gold surged. Futures pointed lower in Japan, Hong Kong and Australia, with regional shares poised to snuff out two days of gains. The S&P 500 Index fell almost 3% following the Fed’s 50 basis-point rate cut and comments from Chairman Jerome Powell that the virus outbreak will weigh on activity “for some time.” The two-year Treasury yield sank below 0.65%, while the 10-year plunged below 1% for the first time and the dollar retreated, while Australian bonds opened higher. Elsewhere, oil advanced for a second day after an OPEC+ committee recommended a larger supply cut to offset lost demand from the spread of the virus.
Over in the U.S., the coronavirus has already spread so far that experts say draconian limits on domestic travel probably wouldn’t be effective. But the outbreak could still have widespread effects on transportation as people opt to stay home and transit workers call in sick, and could end up doing more harm than good. In fact, some studies have shown that travel restrictions have limited effect. “When you’re dealing with an influenza virus-like transmissions, it’s like trying to control the wind,” said Michael Osterholm, director of the Center for Infectious Disease Research and Policy at University of Minnesota. “People may want to try to limit their time in large crowds, but I don’t think that a domestic limitation on travel is going to help at all.” At least 100 coronavirus cases have been confirmed in the U.S. Six deaths linked to the virus have been confirmed in Washington state, most clustered around a nursing home. Meanwhile, Apple has now restricted employee travel to Italy and South Korea as the virus continues to spread. The number of global cases reached 90,441, and the death toll has risen to 3,123.
Australia’s benchmark stock index has a new leader: A biotechnology firm that makes therapeutic products from human blood. With a market value of A$142 billion ($93 billion), CSL Ltd. now accounts for 8.2% of the S&P/ASX 200 Index, compared with 8.1% for Commonwealth Bank of Australia. The Melbourne-based firm charged ahead of CBA after Australia’s central bank cut its benchmark rate, which sent bank shares lower. The unseating of CBA is notable in a market that’s dominated by banks. The nation’s big four lenders — CBA, Westpac, Australia & New Zealand Bank and National Australia Bank — make up about a fifth of the S&P/ASX 200 Index. CSL collects blood plasma from donors and turns it into therapies to help patients who have autoimmune disorders or problems with blood clotting. It also manufactures flu vaccines.
America’s Democratic presidential hopefuls face a key test on Tuesday local time: Contests across 14 states, plus American Samoa, that will award more than a third of all delegates to the Democratic convention in July. This week, former U.S. Vice President Joe Biden has coalesced the Democratic Party’s establishment around him as he tries to thwart self-described democratic socialist Bernie Sanders. And it still might not be enough. Sanders holds the advantage in key contests — including delegate-rich states like Texas and California — and former New York Mayor Michael Bloomberg threatens to play spoiler. So the risk for moderate Democrats is that the exit of Pete Buttigieg and Amy Klobuchar is too little, too late. (Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Two Hong Kong brothers are taking on Tesla with an $195,000 electric supercar.
- Emission curbs are helping this Thai jet-fuel firm cushion the blow from the virus.
- YouTube has become a refuge for Pakistan journalists battling censors.
- Easter is shaping up to be air travel’s next test of the virus impact.
- The World Bank is offering $12 billion in virus aid to developing nations.
- Satellite pollution data is showing that China is getting back to work.
To contact the editor responsible for this story: Alyssa McDonald at amcdonald61@bloomberg.net
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