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China leads nations pledging to boost fiscal spending to cushion the economic hit from the coronavirus, the IMF highlights flaws in the global economic system, and HSBC braces for a major overhaul when results are announced this week. Here are some of the things people in markets are talking about today.

Bulking Up

China, Hong Kong and Singapore are pledging extra fiscal stimulus to counter the economic hit from the coronavirus, which will lead the agenda of the world’s top finance officials this week. China said Sunday it will enact more-efficient stimulus measures despite a widening fiscal gap, including lower corporate taxes. Hong Kong’s top finance official said the city is facing “tsunami-like” shocks that may lead to a record budget deficit. Singapore is headed for its biggest budget gap in almost two decades, according to analysts. Meanwhile, the U.S. and other nations are ready to fly home hundreds of passengers stuck on a quarantined ship in Japan, but infected travelers are staying behind. The evacuation has sparked fears of contagion spreading as the travelers return home from the cruise ship in Japan and another that docked in Cambodia. Get all the latest news on the coronavirus in our  Virus Update. 

IMF Warning

The head of the International Monetary Fund said the lack of deeper improvements in the global economic system is hindering what’s already an “anemic” outlook for growth, especially as the shock caused by the coronavirus further dims prospects for a pickup this year. “The monetary policy space is shrinking and the reliance on fiscal measures as well as on structural reforms to boost growth ought to be stronger,” IMF Managing Director Kristalina Georgieva said Sunday in a Bloomberg Television interview in Dubai. What’s missing is “a more aggressive swing in structural reforms.” As the virus’s impact raises the threat of disruption across supply chains, most major central banks are on alert but have yet to indicate that they plan monetary easing.

Market Open 

Asian stocks looked set for a cautious start to the week as investors mulled China’s latest response to support its economy from the impact of the coronavirus outbreak. Futures edged lower in Japan, Hong Kong and Australia after two weeks of gains for global equities. Volumes may be lower than average Monday due to a U.S. holiday and Treasuries won’t trade.  U.S. equities on Friday eked out gains as data showed retail sales rose for a fourth straight month, underscoring steady consumer spending. Treasuries ended the week with the 10-year yield at 1.58%.  Coming up this week, the minutes of the FOMC’s Jan. 28-29 meeting are released Wednesday. There is a Bank of Indonesia rate decision Thursday.  Earnings season continues with reports from energy and mining firm BHP Group, financial firms including HSBC and travel companies including Qantas Airways. 

Huge Overhaul

HSBC Holdings Plc is about to unveil its third major overhaul in a decade Tuesday, and trading desks and back offices are bracing for possible scenarios such as another reshuffle of senior management, a surprise new chief executive, withdrawals from businesses and job reductions across the globe. Measures are likely to include billion-dollar writedowns, cuts at trading desks, and a reduction in exposure to countries ranging from Turkey and Greece to Oman, people familiar with the matter say. The future of interim Chief Executive Officer Noel Quinn also looks uncertain. Last fall, Quinn told staff he was “certainly not intending, and was not asked, to be a caretaker.” Some analysts had expected he would have been confirmed as the full-time chief by now. 

Huawei Rift 

The fight between the U.S. and Europe over Chinese technology is threatening to split the transatlantic military alliance. With the U.S. defense establishment identifying China as its No. 1 priority, a bi-partisan delegation headed by Secretary of State Michael Pompeo and House Speaker Nancy Pelosi rammed home their concerns about the use of equipment from Huawei Technologies Co. at the Munich Security Conference over the weekend. The officials warned that installing Huawei kit could undermine cooperation with U.S. allies as Donald Trump’s hardball trade tactics started to infect his administration’s relationships on defense.

What we've been reading

This is what's caught our eye over the last 24 hours.

• Hedge funds bet the Australian dollar will overcome the impact of coronavirus.
• Toyota to restart three China plants this week amid virus fight. 
• Virus turns Thai firm into world’s top asset management stock. 
• The depleted coffers of China provinces as virus spreads. 
• Thailand generates $3.2 billion from 5G permit auction, topping expectations.  
• Hong Kong international schools say they may not survive health crisis. 
• Elton John, stricken with pneumonia, cuts New Zealand show short. 

To contact the editor responsible for this story: Adam Haigh at ahaigh1@bloomberg.net

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