Markets boosted by rate hopes ahead of Fed decision

HONG KONG - Most markets rose Monday ahead of a crucial Federal Reserve policy meeting later in the week, with investors hoping for a less hawkish tilt in their plans for interest rates.

A sense of relief has settled on trading floors over the past week following a report that the US central bank could take its foot off the accelerator in its push to rein in decades-high inflation.

Adding to the positive mood has been an indication that others around the world are looking at slowing down, though the excitement was tempered Friday by record inflation readings in Europe and data showing prices remained elevated.

Asian dealers were given a strong lead from Wall Street, where all three main indexes ended more than two percent higher thanks to a rally in tech firms following a strong earnings report from Apple.

Tokyo, Seoul, Sydney, Singapore, Taipei, Mumbai, Bangkok and Wellington all piled on more than one percent, while Jakarta was also up.

However, Hong Kong and Shanghai fell on concerns about China's growth outlook as the government continues its zero-Covid strategy of lockdowns, with restrictions imposed in towns and cities nationwide.

Data showing activity in the factory and services sectors contracted last month highlighted the impact the measures are having on the world's number two economy.

The drops also come after China announced a tally of over 2,500 new virus cases, the biggest outbreak in more than two months, fanning concerns of further painful shutdowns.

All eyes are on the Fed's policy meeting, which ends Wednesday.

While it is widely expected to announce a fourth successive 75 basis point hike, traders will be poring over the post-meeting statement looking for a hint that officials are open to dialing back the pace of increases.

The gathering comes as other central banks have recently indicated they are willing to ease up, with Canada raising rates less than expected last week, while authorities in Australia and Europe have taken a more dovish view.

Concerns that rapidly rising borrowing costs will send economies into a recession have hammered markets globally this year.

"There has been a succession of central bank downshifts, adding to the 'peak hawkishness' theme running through macro markets," said SPI Asset Management's Stephen Innes. "And investors are entirely focused on these U-turns as peak rates get priced in. 

"So, people don't want to miss the stock market rally wagon, especially if the Fed conveys a similar policy downshift this week, sending the rally into overdrive as pivot procrastinators will be forced to chase."

The policy decision is followed Friday by the release of US jobs figures, which will give a fresh snapshot of the economy in light of rising prices and interest rates.

A better-than-expected earnings season has also provided support to global markets, easing concerns that tighter monetary policies would hammer firms' bottom lines, though big-name tech giants have taken a blow.

National Australia Bank's Rodrigo Catril said more than 70 percent of companies that had reported had beaten forecasts, though he added that while markets had risen over the past month, some traders remained cautious.

"Those with a positive inclination may look at October's equity performance as a sign of a new uptrend while others would suggest we have not yet seen the worst given the lag effects from monetary policy and the prospect of still more tightening to come," he said in a note.

Key figures around 0710 GMT 

Tokyo - Nikkei 225: UP 1.8 percent at 27,587.46 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 14,700.12

Shanghai - Composite: DOWN 0.8 percent at 2,893.48 (close)

Euro/dollar: DOWN at $0.9945 from $0.9967 on Friday

Pound/dollar: DOWN at $1.1596 from $1.1618 

Dollar/yen: UP at 147.76 yen from 147.46 yen

Euro/pound: UP at 85.79 pence from 85.77 pence

West Texas Intermediate: DOWN 0.9 percent at $87.09 per barrel

Brent North Sea crude: DOWN 1.0 percent at $94.85 per barrel

New York - Dow: UP 2.6 percent at 32,861.80 (close)

London - FTSE 100: DOWN 0.4 percent at 7,047.67 (close) 

Agence France-Presse

Markets sink as US jobs data fan rate hike bets

HONG KONG - Stock markets sank Monday as forecast-beating US jobs data fanned expectations for another big Federal Reserve interest rate hike, while traders are now focusing on an upcoming inflation report.

A brief rally across trading floors last week gave way to gloom as investors grow increasingly worried that central bank efforts to tame runaway prices will plunge the global economy into recession.

Adding to the stress is the upcoming corporate earnings season, which many fear will show that companies are feeling the pain of tightening monetary policies, and fresh China-US tensions.

All three main indexes tumbled Friday -- with the Nasdaq off almost four percent -- following news that a net 263,000 US jobs were created in September.

While that was down from August it was more than expected and showed that the labor market remained robust and highlighted the tough job Fed officials face in their battle against four-decade-high inflation. 

With the spotlight on a consumer price index reading later in the week, policymakers continue to take a hawkish tone, warning they will not ease up on their rate hikes even if that means causing a recession.

Asia tracked the US losses, with Hong Kong down three percent and hefty selling in Sydney, Singapore, Mumbai, Bangkok, Manila, Jakarta and Wellington. 

Shanghai dropped as traders returned from a week-long holiday, with rising Covid numbers in the country leading to worries of more economically painful lockdowns ahead of a key Communist Party gathering.

Chinese tech firms were also hit after Washington on Friday announced new export controls aimed at restricting China's ability to buy and make high-end chips with military applications, adding to tensions between the countries.

London, Paris and Frankfurt all fell in the morning, while Moscow stocks plunged nearly 12 percent following a series of strikes on cities across Ukraine and after the bridge connecting Crimea to Russia was hit by an explosion at the weekend.

Tokyo, Seoul and Taipei were closed.

"The sell-off in equities and the rally in the dollar following Friday's US employment report reflects the concern that the hurdle for a Fed pause is high," said SPI Asset Management's Stephen Innes.

"The rising unemployment rate needed to help bring down CPI inflation will require job losses despite the political fallout that is bound to ensue. Regardless, tightening monetary policy until job losses materialize is on the cards."

He added that there was also nervousness about earnings.

"Unlike June, where earnings were poised to beat expectations, investors are biased towards hitting the sell button as concern around lagged effects of tightening hitting bottom lines now permeate expectations," he said in a note.

The prospect of higher US borrowing costs sent the dollar rallying Friday and it held most of those gains in early Asian trade.

Investors are keeping an eye on the yen, which is edging back to the lows touched last month when the government stepped in with a massive cash injection to support the currency.

The pound weakened even as the Bank of England said it was launching a temporary facility aimed at easing liquidity pressures that arose after the UK government's budget shocked markets last month.

It said it was ready to increase the size of its UK government bond purchases under an emergency measure due to end Friday.

The pound has been hammered -- at one point hitting a record low versus the dollar -- since finance minister Kwasi Kwarteng unveiled a debt-fuelled tax-cutting mini-budget.

Oil prices edged down after seeing their biggest weekly gain since March in reaction to a decision by OPEC and other major producers led by Russia to cut output by two million barrels a day.

The drop Monday came on demand concerns caused by China's Covid flare-ups and more weak data out of Beijing caused by recent lockdowns.

"A slew of weak macroeconomic data that China has released shows that there is very limited room for an economic rebound in the short term, which is hard to provide support for earnings and market confidence," Shen Meng, at investment bank Chanson & Co in Beijing, said.

Key figures around 0810 GMT 

Hong Kong - Hang Seng Index: DOWN 3.0 percent at 17,216.66 (close) 

Shanghai - Composite: DOWN 1.7 percent at 2,974.15 (close)

Tokyo - Nikkei 225: Closed for a holiday

London - FTSE 100: DOWN 0.7 percent at 6,944.90

Pound/dollar: UP at $1.1074 from $1.1082 on Friday

Euro/dollar: DOWN at $0.9703 from $0.9743

Euro/pound: DOWN at 87.62 pence from 87.97 pence

Dollar/yen: DOWN at 145.35 yen from 145.38 yen

West Texas Intermediate: DOWN 0.4 percent at $92.27 per barrel

Brent North Sea crude: DOWN 0.5 percent at $97.44 per barrel

New York - Dow: DOWN 2.1 percent at 29,296.79 (close)

-- Bloomberg News contributed to this story --

Agence France-Presse

Markets drop again as traders brace for another big Fed hike

HONG kong - Markets fell Monday as traders extended last week's rout across risk assets, with expectations high that the Federal Reserve will this week announce another outsized interest rate hike.

With recent data showing US inflation rooted at four-decade highs, investors are increasingly pessimistic about the outlook for the global economy.

Some observers have warned of a sharp recession in many countries caused by the huge rate increases, which are hitting families in the pocket.

And with uncertainty rife owing to a range of issues, including Russia's war in Ukraine and China's lockdown-induced slowdown, equities are in danger of revisiting the lows they hit in June.

Several central banks are due to make rate announcements this week, with Japan and Britain among the biggest, although the main event is Wednesday's Fed decision.

There had been a hope that after two 75-basis-point increases in a row, and economic data showing weakness, officials would take their foot off the pedal this month.

But last Tuesday's disappointing consumer price figures shocked traders and ramped up bets for a third successive 75-point rise, while some have predicted a whole percentage point move.

Policymakers, including Fed boss Jerome Powell, have repeatedly said their ultimate aim is to bring inflation under control, even if that means sending the economy into recession.

"It is clear that the Fed will project hawkish messaging, once again reiterating that it will bring down inflation unconditionally," said Vasileios Gkionakis at Citigroup.

Wall Street's worst week since June ended with more losses after FedEx reported Thursday that it shipped fewer packages than expected over the summer owing to weakness in the global economy.

That came as CEO Raj Subramaniam said he expects a global recession.

Asian equity investors continued the selling on Monday.

Hong Kong closed down one percent, even after reports that the city's government was considering ending mandatory hotel quarantine for incoming travelers.

Shanghai was also down despite news that megacity Chengdu was ending a two-week Covid-19 lockdown that saw 21 million people affected.

Sydney, Seoul, Singapore, Taipei, Manila and Wellington were also in the red, though Mumbai and Bangkok inched up and Jakarta was flat. Tokyo was closed for a holiday.

Frankfurt and Paris both opened lower. London was closed for the funeral of Queen Elizabeth II.

The prospect of more big Fed rate hikes is also keeping the dollar at multi-decade highs against its major peers, with the yen feeling most of the pressure as the Bank of Japan refuses to tighten policy.

"Speculative selling of the yen is readily justified by the ongoing widening in US-Japan yield differentials," said Ray Attrill, of National Australia Bank.

"Until or unless something happens to arrest or reverse this spread widening, the yen is susceptible to additional selling pressure."

The Japanese unit last week hit a fresh 24-year low of 144.99 to the dollar, though it has bounced slightly after comments from BoJ officials that signaled they were ready to intervene to provide support.

Oil prices dipped despite the news out of Chengdu as demand fears are fuelled by the growing fear of recession around the world.

Agence France-Presse

Asian markets drop as Fed minutes cause fresh rate hike woe

HONG KONG - Markets dropped in Asia on Thursday following a sell-off in New York spurred by minutes from the Federal Reserve indicating officials intended to keep lifting interest rates to tackle decades-high inflation.

While policymakers said they would eventually have to start tempering their tightening pace, they said they would keep borrowing costs elevated "for some time", though admitted there was a risk of going too far and damaging the economy.

The minutes dampened hopes that after a period of quick, sharp increases this year, the bank could possibly begin lowering them in 2023 once inflation was coming down.

Bets on a more dovish approach in the new year had been boosted by data showing inflation came down quicker in July than expected. That helped drive a rally in equities from their June lows and weighed on the dollar.

But the realization that policy would likely stay restrictive undermined the sense of optimism, pushing all three indexes on Wall Street down Wednesday with the tech-heavy Nasdaq taking the biggest hit, while the dollar rallied and extended gains in Asia. 

And news that UK inflation spiked above 10 percent for the first time since 1982 added to the downbeat mood.

Asian traders appeared increasingly worried that the Fed will slip up as it tries to bring down inflation without causing another recession in the world's biggest economy.

Tokyo, Hong Kong, Sydney, Shanghai, Seoul, Taipei, Mumbai, Wellington and Bangkok were down, though Singapore, Manila and Jakarta edged up. 

London fell in the morning while Frankfurt and Paris rose.

"The key takeaway from these minutes would appear to show that there is little inclination on the part of anyone on the (policy board) to even look at the possibility of rate cuts," said Michael Hewson at CMC Markets.

He added that they "chime with more recent comments from Fed officials which suggest that we could see at least another 1.5% in rate rises by year end".

And JP Morgan Asset Management's Meera Pandit told Bloomberg Television: "We do still anticipate there's going to be a lot of interest-rate volatility in the back half of the year, especially once markets start to perhaps acknowledge the fact that we might not necessarily see cuts in 2023 that are being priced in."

Sentiment was also dragged by continuing worries about China's economy, with Goldman Sachs and Nomura slashing their growth outlooks again following another weak round of data and as the country reels from Covid-19 lockdowns.

The announcements came after Beijing on Monday cut interest rates in a surprise move, before Premier Li Keqiang called on six key provinces -- accounting for about 40 percent of the economy -- to bolster pro-growth policies.

But Nomura economists said that while officials will likely unveil further measures "rolling out a comprehensive stimulus package is of low probability in a year of government reshuffle, while the need for maintaining zero-Covid makes conventional stimulus measures much less effective". 

Agence France-Presse

European Central Bank signals rate hike as soon as July to combat inflation

FRANKFURT, Germany - European Central Bank chief Christine Lagarde hinted Wednesday at a first interest rate hike in July to tackle soaring inflation, echoing the actions of other major central banks and heralding the end of the eurozone's cheap money era.

The ECB should end its bond-buying stimulus "early in the third quarter" and could raise interest rates "only a few weeks" later, Lagarde said in a speech in the Slovenian capital Ljubljana. 

The comment is the clearest sign yet from Lagarde that the ECB is ready to move on rates sooner rather later, as the institution trails rate hikes made by the US Federal Reserve and others to tame global inflation.

Any hike would be the ECB's first in over a decade and would lift rates from their current historically low levels.

These include a minus 0.5 deposit rate which effectively charges banks to park their excess cash at the ECB overnight.

Inflation in the eurozone climbed to 7.5 percent in April, an all-time high for the currency club and well above the ECB's own two-percent target.

The surge, driven in no small part by steep increases in prices for energy due to the Russian invasion of Ukraine, has strengthened calls for the ECB to follow its peers towards hikes. 

ECB policymakers will decide their course of action in upcoming June 9 and July 21 meetings, with the July date now seen as the most likely opportunity for a rate announcement.

- Rate rise -

At its last meeting in April, the ECB's governing council resolved to end its vast monthly bond purchases "in the third quarter".

Over recent years, the scheme has hoovered up billions of euros in government and corporate bonds each month to stoke economic growth and keep credit flowing in the 19-nation currency club.

The ECB should draw a line under it "early" in the third quarter, which starts in July, Lagarde specified on Wednesday.

Ending net purchases under the programme would open the door to an interest rate rise that could follow "only a few weeks" after, she said. 

After the initial move the process of monetary policy "normalisation", taking interest rates out of negative territory, would be "gradual".

- July pressure -

"To sum up Lagarde's speech: first rate hike on July 21," Carsten Brzeski, head of macro at ING bank, said on Twitter.

Decisions by the Fed and the Bank of England to raise rates aggressively to counter inflation have added to the pressure on the ECB to act.

German central bank president Joachim Nagel said Tuesday he "will advocate a first step normalising ECB interest rates in July".

The call made by the head of the traditionally conservative Bundesbank has been echoed by other members of the governing council.

On Wednesday, the head of the French central bank Francois Villeroy de Galhau also said the ECB would "progressively raise rates from the summer" to steer inflation towards the ECB's two-percent target. 

The central bank is set to ratchet up interest rates at a delicate moment for the economy.

The war in Ukraine has both pushed up prices and added to supply chain disruptions, putting further strain on households and businesses.

In response to the invasion, the European Union has sought to reduce its reliance on Russian energy imports and is in discussions over an embargo of Russian oil that would add to the economic stress.

The ECB would raise its rates in July "followed by a return to zero in September" Gilles Moec, chief economist at Axa insurance, told AFP.

But "between the war in Ukraine, a complicated coronavirus situation in China", which has seen a series of lockdowns and spillovers from rate hikes in the United States, the ECB will not be able to "pursue normalisation easily", Moec said.

Agence France-Presse

World stocks in third day of gains as Omicron fears ease

LONDON - A rebound in market sentiment continued in early European trading on Wednesday, with world shares set for their biggest two-day jump since November last year as investors became less concerned about the Omicron variant.

World shares plunged at the end of last month when the discovery of a new COVID-19 variant spooked investors. But sentiment has rebounded sharply this week in the absence of indications that the variant would derail the economic recovery.

The STOXX 600 had its biggest daily jump since November 2020 on Tuesday and, despite European stock index futures initially being in the red on Wednesday, at 0901 GMT the STOXX 600 was up 0.4 percent, set for its third consecutive day of gains.

The MSCI world equity index, which tracks shares in 50 countries, was up 0.2 percent - its highest since Nov. 26, when Omicron fears first hit markets.

"To be honest, it was more the absence of bad news rather than any concrete good news helping to drive sentiment," wrote Deutsche Bank strategist Jim Reid in a note to clients.

"Every day that passes without a wave of severe cases driven by Omicron is offering more hope that this won't be the curveball to throw the recovery off course."

British drugmaker GSK said on Tuesday its antibody-based COVID-19 therapy with US partner Vir Biotechnology was effective against all mutations of Omicron.

But a study in South Africa suggested that the Pfizer vaccine may only partly protect against Omicron.

"Clearly in the very short term uncertainty has risen over the Omicron virus... but overall at this stage we do not believe it will derail the macro picture in the medium-term," said Jeremy Gatto, multi-asset portfolio manager at Unigestion.

OUTLOOK FOR RATES

Oil prices eased as investors waited for more information about the extent to which the variant would impact demand. At 0911 GMT, Brent crude futures were down 0.4 percent and US West Texas Intermediate crude was down 0.5 percent on the day.

The dollar index was steady around 96.233, while the euro was up 0.1 percent at $1.1283.

The euro-dollar pair has struggled to recover from the 2021 lows it reached in November, hurt by expectations that the US Federal Reserve will tighten monetary policy more quickly than the dovish European Central Bank.

Last week, Fed Chair Jerome Powell said it might be time to stop seeing inflation as transitory, suggesting the central bank could speed up tapering.

"The market is pricing between two to three hikes next year now. We think that that pricing is too optimistic. We believe that the Fed will actually be slower to deliver on these rate hikes," said Unigestion's Gatto, adding that this would be supportive for equities.

The US 10-year Treasury yield, which had its biggest weekly drop since June 2020 last week due to a combination of Powell's hawkish comments and fears over Omicron, was a touch lower on Wednesday at 1.4597 percent.

US inflation data is due on Friday.

Meanwhile, shares in China's Evergrande Group hit a record low, after a missed debt payment deadline put the developer at risk of becoming the country's biggest defaulter - but the news had limited global market impact because it is already "well-priced" by the market, Unigestion's Gatto said.

In virtual talks, President Joe Biden warned Russian President Vladimir Putin that the West would impose "strong economic and other measures" on Russia if it invaded Ukraine, while Putin demanded guarantees that NATO would not expand farther eastward.

(Reporting by Elizabeth Howcroft; Editing by Alex Richardson)

-reuters- 

Global markets: Asian shares inch up, caution prevails ahead of Jackson Hole

HONG KONG - Asian shares were set for their best week since February on Friday as Chinese markets cheered a burst of central bank liquidity although broader enthusiasm was capped ahead of what could be a pivotal speech by the U.S. central bank chief.

U.S. stock futures were up 0.2% in Asian hours, suggesting some optimism after sentiment on Thursday was dented by a deadly attack in Afghanistan, and after the Federal Reserve's more hawkish policymakers urged an end to stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.17%, up 3.78% on the week, which would be its best week since February, while Japan's Nikkei shed 0.46%.

Chinese blue chips rose 0.45%, a reversal of recent weeks in which mainland stocks have weighed on the region, as investors took comfort in the central bank's biggest weekly cash injection into the banking system since February. Hong Kong's benchmark rose 0.15%.

Recent regulatory crackdowns have roiled sectors from property to tech and wiped half a trillion dollars from China's markets in last week alone.

"A-shares (onshore Chinese shares) and Hong Kong are taking a break after some pretty extreme movements in the last two weeks," said Qi Wang, CEO of MegaTrust Investment (HK).

"Investors are grappling with the regulatory risk versus still strong earnings."

ZhongAn Online P & C Insurance Co Ltd rose 6.3% after posting strong results, for example.

Australian and Korean benchmarks traded either side of flat.

In early European trade, the pan-region Euro Stoxx 50 futures were down 0.06%, but FTSE futures rose 0.08%. But the main focus of the day is still to come.

Fed Chair Jerome Powell is set to speak at 1400 GMT in the Kansas City Fed's central banking conference, an event normally held in Jackson Hole, Wyoming, which has been used by the bank in the past to provide guidance on future policy.

Analysts at RBC said in a note that while much of the summer had been spent waiting for the event, there was "skepticism that the Fed will provide more specific information around a timetable...amidst a rise in Delta variant COVID cases."

Ahead of the speech, public remarks by the Fed's more hawkish speakers on Thursday urging the central bank to begin paring bond purchases weighed on Wall Street, which closed slightly lower, ending a streak of all-time closing highs.

The Dow Jones Industrial Average fell 0.54%, the S&P 500 lost 0.58%, and the Nasdaq Composite dropped 0.64%.

Dallas Fed President Robert Kaplan said he believed the economic recovery warrants tapering of asset purchases to commence around October. Earlier, St. Louis Fed President James Bullard said the central bank was "coalescing" around a plan to begin tapering.

The dollar and U.S. yields were little moved on Friday ahead of Powell's speech.

The yield on benchmark 10-year Treasury notes was 1.3441%, down from a two-week high of 1.375% set the day before, but barely changed from the U.S. close.

Gold rose 0.53% to $1,801.55 per ounce as some investors sought safety ahead of the speech.

U.S. crude rose 1.39% to $68.36 a barrel, Brent crude rose 1.46% to $72.03 per barrel, as energy companies began shutting production in the Gulf of Mexico ahead of a potential hurricane this weekend.

-reuters-

Fed's appetite for further easing, higher inflation in focus

The U.S. Federal Reserve last month signaled that interest rates are likely to stay at zero through 2023, vowing to wait on rate hikes until inflation reaches 2 percent and is set to rise moderately above that level for a time.

How much above 2 percent, for how long, and how the central bank might speed the process forward - the new guidance doesn't say.

Minutes of the Fed's September meeting to be published Wednesday at 2 p.m. EDT (1800 GMT) should provide a window into the Fed's internal debate on those issues and, perhaps, some new answers on what it will mean in practice.

With an ongoing pandemic that's claimed more than 210,000 U.S. lives and a recession that has left millions without jobs, it's clear there is a lot at stake.

Fed Chair Jerome Powell warned Tuesday that the outlook for the U.S. economy is "highly uncertain," and that too little policy support could lead to more household and business insolvencies and "recessionary dynamics" where a weak recovery feeds on itself.

The minutes may show how widely shared that concern is.

In remarks since the September meeting, St. Louis Fed President James Bullard for one has said he expects the U.S. economy to notch a near-full recovery from the coronavirus recession by year's end.

On the other end of the spectrum is Boston Fed President Eric Rosengren, who has warned that a second wave of Covid-19 this fall and winter could set the recovery back and create a credit crunch.

With just a few weeks until Nov. 3 when Americans pick their next president, which way the economy develops could spell a very different policy environment for whoever wins at the ballot box.

The Fed's September decision drew two dissents. Dallas Fed President Robert Kaplan thought it tied the Fed's hands unnecessarily. Minneapolis Fed President Neel Kashkari wanted an even higher bar for future rate hikes.

But even among those who supported the decision, the minutes may show a range of views on how it should be carried out. Of particular interest will be any evidence of appetite for adding to the Fed's $7.1 trillion stash of bonds and other assets to ease policy further, either soon or once the recovery is further along.

Fed policymakers appear divided on how high the Fed should try to push inflation, which for years has failed to meet the Fed's 2 percent target and is expected to end this year well below that level.

Chicago Fed President Charles Evans wants to get core inflation up to 2.5 percent, and for it to stay there for a while. Kaplan, by contrast, said last week he would be uncomfortable with 2.5 percent inflation, and worries about excess risk-taking with rates at zero for too long

-reuters-

Equities bounce after Fed turns on taps

LONDON - Global equities shot higher Tuesday after the US Federal Reserve launched a massive stimulus program to support businesses hit by the virus lockdown, offsetting fears about a possible second wave of infections.

The stocks rally was rooted also in reports that US President Donald Trump is considering a $1.0-trillion infrastructure investment package.

Tuesday's gains helped wipe out some of the heavy losses suffered Monday caused by new virus cases around the world -- including in Beijing, Florida, Texas and Tokyo.

Investors were taking heart from easing lockdowns, with several European countries re-opening their borders and British shops trading again.

But the main driver of the gains was the Fed's Main Street Lending Program and an emergency lifeline under which the Fed will buy up to $750 billion in corporate bonds.

The Fed announcement saw all three main indexes on Wall Street finish higher Monday, and the positivity filtered through to Asia and Europe.

Tokyo's main stocks index had shot up almost five percent by its close Tuesday, winning an extra boost from a Bank of Japan move to ramp up aid for firms struggling with virus fallout.

Seoul surged more than five percent and Sydney almost four percent, while Hong Kong jumped 2.4 percent and Shanghai more than one percent.

Europe also fizzed higher, with Frankfurt soaring 3.2 percent by the half-way stage, Paris winning 2.6 percent and London adding 2.4 percent in value.

"The formal start of the Fed's corporate bond-buying program boosted global sentiment," said City Index analyst Fiona Cincotta.

"Adding to the seemingly addictive stimulus high, the Trump administration is weighing up a $1 trillion infrastructure spend to spur on the economy in the wake of the coronavirus crisis."

The Fed had in recent weeks stated that it was on the verge of rolling out the Main Street scheme, but held off as it expanded the criteria to reach more struggling companies.

The plan is part of a massive financial backstop put in place by the bank to protect the economy from the worst of the virus crisis. The government has also pledged trillions of dollars in stimulus support.

The US Chamber of Commerce called it "a lifeline for businesses that have been disrupted by the health and economic consequences of COVID-19".

Fed boss Jerome Powell was meanwhile to give two days of congressional testimony, starting Tuesday.

He caused ructions on markets last week with a sobering warning about the economic outlook.

Agence France-Presse

Fed vows to support US economy's 'long road' to recovery after dire 2020

WASHINGTON -- The US Federal Reserve on Wednesday signaled it plans years of extraordinary support for an economy facing a torturous slog back from the coronavirus pandemic, with policymakers projecting the economy to shrink 6.5 percent in 2020 and the unemployment rate to be 9.3 percent at year's end.

In the first economic projections of the pandemic era, US central bank policymakers put into numbers what has been an emerging narrative: that the shutdowns, restrictions and other measures used to battle a health crisis will echo through the economy for years to come rather than be quickly reversed as commerce reopens.

Some 20 million or more people have been thrown out of work since February, and Fed Chair Jerome Powell acknowledged it could take years for them to all reacquire jobs - an economic blow that is falling heaviest on minority communities at a time when mass protests over police brutality have thrown a new spotlight on racial inequality in the United States.

Powell, acknowledging the nationwide demonstrations in his opening remarks at a news briefing, said it was now the Fed's single-minded mission to bring the job market back to where it was at the end of last year, with the unemployment rate at a record low 3.5% and wage gains accumulating for some of the very same lower-paid workers in the service sector that have suffered most during the recent collapse.

“Twenty-two, 24 million people - somehow as a country we have to get them back to work," Powell said via video link after the end of the Fed's latest two-day policy meeting. "They did not do anything wrong. This was a natural disaster."

"It is a long road. It is going to take some time," he said. "We can use our tools to support the labor market and the economy and we can use them until we fully recover."

YEARS-LONG FIGHT

The fresh policymaker projections start to show just how long that might take. At the median, officials see the unemployment rate falling to 6.5 percent at the end of 2021 and 5.5 percent at the end of 2022 - still a full 2 percentage points above where it was at the end of last year, representing millions of lost years of work and wages.

"The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term," the Fed said in its policy statement.

The response has been an unparalleled level of unanimity in the outlook for monetary policy. All 17 current Fed policymakers see the key overnight interest rate, or federal funds rate, remaining near zero through next year, and 15 of 17 see no change through 2022.

Even in the depths of the 2007-2009 financial crisis and recession some policymakers raised a cautionary flag about the need for higher interest rates to guard against inflation.

This time that debate has disappeared. The Fed's preferred measure of inflation is expected to be a weak 0.8 percent this year, compared to the central bank's goal of 2 percent, and rising to just 1.7 percent at the end of 2022.

At this point "we are not even thinking about thinking about raising rates," Powell said.

The decision to leave the policy rate unchanged on Wednesday was unanimous. The central bank also began shaping the longer-term measures it will use to keep the recovery as strong as possible. Officials promised to maintain ongoing Fed bond purchases at least at the current pace of around $80 billion per month in Treasuries and $40 billion per month in agency and mortgage-backed securities - levels that may be increased later, or supplemented with other strategies.

While growth may resume this year, policymaker forecasts show the rebound beginning in earnest in 2021, with economic growth for the year forecast at 5 percent.

Notably, the Fed did not mark down its long-run estimates of full employment, trend growth or the federal funds rate, a sign officials feel the country may escape permanent economic damage from a health crisis that has killed more than 112,000 in a few months.

"Their messaging is we are keeping rates low, but this is going to work, it is going to get us there," said Bruce Monrad, chairman and portfolio manager at Northeast Investors Trust in Boston.

On Wall Street, which had been near unchanged ahead of the Fed's statement, stock prices ended mixed. The benchmark S&P 500 index was down about 0.5 percent whereas the Nasdaq Composite was up about 0.7 percent. Yields on US Treasuries slipped and the dollar fell against a basket of currencies.

The pledge to keep monetary policy loose until the US economy is back on track repeats a promise made early in the central bank's response to the coronavirus pandemic.

That response included cutting interest rates to near zero in March and making trillions of dollars in credit available to banks, financial firms, and a wide array of companies.

Powell said that while much remains uncertain, particularly the progress of the pandemic, the fiscal and monetary response has been working well so far, maintaining income support for the unemployed and limiting business failures so far.

More may be needed, he said.

"This is the biggest economic shock in living memory," Powell said. The response "has been large, forceful and very quick ... In a class by itself."

-reuters-

World markets rally as Fed unveils 'game changer' measures vs coronavirus

HONG KONG -- Equity markets and crude prices surged while the dollar sank Tuesday after the Federal Reserve unveiled an unprecedented bond-buying program to support the US economy.

While much of the planet goes into lockdown, traders gave a massive thumbs up to the US central bank's pledge to essentially print cash in a move not seen since the global financial crisis more than a decade ago.

The Fed, which has already slashed interest rates to record lows, said it will buy unlimited amounts of Treasury debt and take steps to lend directly to small- and medium-sized firms hammered by restrictions across the country.

The plan failed to inspire US traders, with all three main indexes on Wall Street sliding, but equities in Asia rallied with Tokyo ending more than seven percent higher.


The Nikkei was given extra lift by a Bank of Japan decision to embark on its own massive bond-buying scheme.

Seoul was up more than 8 percent, Hong Kong, Sydney, Singapore and Taipei all rose more than four percent, and Wellington lifted more than seven percent. 

Shanghai and Mumbai added more than 2 percent, Bangkok more than one percent and Manila 0.7 percent, though Jakarta fell almost one percent.

In early trade, London jumped 4 percent, Paris soared 6 percent and Frankfurt climbed 4.5 percent.

AxiCorp's Stephen Innes called the Fed's move "the most significant monetary experiment in the history of financial markets".

"Asian investors like what they see from an all-in Fed, which is being viewed in a very impressive light for both Main and Wall Street, even as the US congress dithers," he added.

Edward Moya at OANDA said it was "a game changer".

SENATE GRIDLOCK

But Innes pointed out that US senators remain gridlocked, with Democrats on Monday again blocking a nearly $2 trillion rescue package for the economy.

"The US senate should be drawing on the experience of its failure to act fast in the 2008 crisis," he said. 

"Instead, it has yet again failed to act responsibly in the 2020 crisis. The proposed economic stimulus package is massive, but the longer the delay, the more colossal it will need to be to appease the markets."

And CMC Markets analyst Michael Hewson said the failure to get the bill through Congress "is sowing concern that US politicians simply don't get it when it comes to the people they claim to represent".

With an expected flood of dollars into financial markets, the greenback suffered a rare sell-off, having surged for the past few weeks.

It lost almost 4 percent against the Australian dollar, 3 percent against the New Zealand dollar and more than 1 percent to the South Korean won, Russian ruble and Turkish lira.

It was also lower against its major peers, with the euro up more than 1 percent. 

The weaker dollar also helped lift crude, which has been hammered to multi-year lows by a crash in demand owing to the global lockdown as well as a price war between producers Saudi Arabia and Russia.

Moya warned that prices would likely fall again as global lockdown efforts hammer demand.

"Oil is only rallying because the Fed's unprecedented measures finally stopped the stronger dollar," he said. 

"Crude prices will have wild swings, but no one is expecting the bottom to be already in place."

KEY FIGURES AROUND 0820 GMT (4:20 p.m. in Manila) 

Tokyo - Nikkei 225: UP 7.1 percent at 18,092.35 (close)

Hong Kong - Hang Seng: UP 4.5 percent at 22,663.49 (close)

Shanghai - Composite: UP 2.3 percent at 2,722.44 (close)

London - FTSE 100: UP 4.0 percent at 5192.18

Dollar/yen: DOWN at 110.56 yen from 111.26 yen at 2200 GMT

Euro/dollar: UP at $1.0820 from $1.0727

Pound/dollar: UP at $1.1638 from $1.1518

Euro/pound: UP at 93.13 pence from 93.11

Brent North Sea crude: UP 3.2 percent at $27.89 per barrel

West Texas Intermediate: UP 4.4 percent at $24.39 per barrel

New York - Dow: DOWN 3.0 percent at 18,591.93 (close)

Agence France-Presse

Federal Reserve ramps up help to US economy on life support

WASHINGTON - The Federal Reserve launched an unprecedented effort on Monday to flood the US economy with money amid the chaos caused by the coronavirus pandemic, as Congress debated a rescue plan for American workers and companies.

Like patients around the world battling the disease itself, the US economy is on life support, with some forecasters projecting a 14 percent contraction in the April-June quarter while the global economy could shrink 1.5 percent this year.

About a third of Americans have been ordered to stay at home, and the Fed warned of "severe disruptions" from the virus as it rolled out another series of measures to pump funds into the economy, including buying unlimited amounts of government debt -- a move akin to printing money.

But while that should provide oxygen to the financial system and keep businesses open, lawmakers continued haggling over an emergency aid package, with Democrats in the House unveiling a proposal that would cost a whopping $2.5 trillion as they demanded more funds to help workers directly and more strings on any aid going to corporations.

President Donald Trump signaled his approval of the Fed's move last weeks to slash the benchmark lending rate to zero, saying central bank chair Jerome Powell had "done a really good job," in a reversal of previous criticism over his refusal to lower rates.

The president also praised the strong US dollar but acknowledged it makes "trade much tougher" -- an unusual statement from an American president, who typically don't comment on the currency's value.

Treasury Secretary Steven Mnuchin spent the day meeting with congressional leaders, and played down Democratic concerns about taxpayers coming to the rescue of major corporations. 

"I want to be clear, there are no bailouts," he said on Fox Business Network. "This isn't corporate welfare. This helps all American workers."

EXISTENTIAL THREAT

Mnuchin said the Fed's measures would provide $4 trillion in needed liquidity into the US economy.

The Fed had already announced it would buy at least $500 billion of Treasury debt as well as $200 billion of mortgage-backed debt, but now has committed to buying "in the amounts needed to support smooth market functioning." 

The Fed's New York branch, which handles the financial transactions, said it would start out by purchasing $75 billion per-day in Treasuries and $50 billion per-day in mortgage-backed securities.

In the latest action, the Fed revived facilities it last used during the 2008 global financial crisis, and expanded others announced in recent days, including buying debt issued by US municipalities and by corporations. 

In addition, the Fed said it would soon unveil a program to lend directly to small- and medium-sized companies -- those that have been hardest hit by the near complete shutdown of the US economy as authorities fight to contain the spread of the virus.

"While great uncertainty remains, it has become clear that our economy will face severe disruptions," the Fed said in a statement, pledging to use all available tools to contain the damage.

"Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate."

CONGRESSIONAL INTERVENTION

Economists praised the effort, but said massive stimulus from Congress is still needed.

"The downturn is not avoidable. The economic carnage associated with downturn can be mitigated so that there is an economy left to ramp up," said Diane Swonk, chief economist at Grant Thornton.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, offered an equally dire warning: "The near-term threat to the economy is existential."

The central bank actions represent "an all-out effort to ensure that the business sector can continue to exist even as economic activity temporarily collapses. The Fed is now effectively the direct lender of last resort to the real economy, not just the financial system."

The central bank pledged to "continue to use its full range of tools to support the flow of credit to households and businesses."

One of the programs, the Term Asset-Backed Securities Loan Facility (TALF), will help backstop recent student loans, car loans and credit card debt as well as small business loans.

Agence France-Presse

US Fed creates new mechanism to ensure credit available

WASHINGTON --- Amid fears the American financial system will lock up, the Federal Reserve on Tuesday announced yet another mechanism to ensure credit will be available to US homes and businesses.

The credit facility will provide funding for up to 90 days to major financial institutions known as primary dealers, the Fed said.

"The facility will allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households," the central bank said in a statement.

source: news.abs-cbn.com

Global stocks, oil plunge as Fed virus move fails to ease fears

LONDON - Stock markets and oil prices went into freefall Monday as interest rate cuts and fresh stimulus measures by central banks failed to lift confidence, with analysts warning that the Federal Reserve may have reached the limits of its power to fend off recession as the coronavirus spreads.

Brent North Sea oil plunged more than ten percent to a four-year low, as a price war between major producers Saudi Arabia and Russia added to sliding crude demand caused by the virus.

The euro surged one percent against the dollar after the Fed on Sunday slashed borrowing costs to almost zero -- its second emergency cut in less than two weeks. 

The US central bank also unveiled a massive asset-buying programme, similar to measures put into place during the global financial crisis more than a decade ago.

The Bank of Japan joined in on Monday, saying it would ramp up its bond-buying programme.

New Zealand's central bank also slashed rates to record lows in an attempt to cushion the economic blow, while the People's Bank of China has injected vast sums into financial markets to ease liquidity worries.

In joint action coordinated with the European Central Bank, Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank, the Fed moved to counteract global "dollar funding pressures" according to its boss Jerome Powell.

But traders were left unimpressed, with the virus showing no sign of letting up, while the head of the World Health Organization chief Tedros Adhanom Ghebreyesus said it was impossible to tell when it would peak globally.

With G7 leaders set to hold crisis videoconference talks later Monday, IMF chief Kristalina Georgieva called Monday for global governments to work together to provide massive spending as in the 2008 financial crisis to help the economy withstand the damage from the coronavirus pandemic.

Trading was halted on Wall Street just after the opening bell, with the Dow dropping nearly 10 percent. 

In afternoon trading in Europe, Paris 10.7 percent, Milan 10.9 percent, Madrid 11.3 percent, Frankfurt 9.5 percent and London 7.9 percent.

Airlines and tourism groups were the biggest fallers after slashing capacity, with TUI down by nearly a third and British Airways-parent IAG crashing 28 percent.

The car sector also slid as carmakers Fiat Chrysler and Peugeot-Citroen said they were halting production.

"While these (central bank) moves may go some way to easing any potential blockages in the plumbing of the financial markets, they won't adequately compensate for the upcoming economic shocks that are about to come our way," said CMC Markets analyst Michael Hewson.

The scale of the crisis was laid bare by data showing Chinese industrial production for January and February shrank 13.5 percent, the first contraction in around 30 years.

Meanwhile, manufacturing activity in New York state fell to its lowest level since 2009, according to the New York Federal Reserve Bank's monthly industry survey.

Equity markets continue to be whipsawed by the disease, which has now infected almost 170,000 people and killed more than 6,000 with several countries going into lockdown as Europe becomes the new epicentre of the outbreak.

ASIA MELTDOWN

Sydney's stock market led losses in Asia-Pacific, tumbling 9.7 percent in its worst daily drop on record, while Manila shed nearly eight percent and Bangkok and Mumbai dropped more than five percent.

Hong Kong, Singapore, Taipei and Jakarta all lost more than four percent. Wellington and Seoul were more than three percent off.

Shanghai tumbled 3.4 percent after the release of the industrial production data, which came a week after news that Chinese exports had collapsed.

Tokyo ended 2.5 percent lower, after a rally sparked by the Bank of Japan's support measures announcement fizzled.

The broad retreat followed a tumultuous week that saw some stock markets suffer their worst days in decades and in some cases their worst ever.

And experts said there was a concern that the Fed might be running on empty with regards to further action.

Sunday's move "raises the question of whether the Fed has anything left in the tank should the spread of the virus not be contained", said Kerry Craig at JP Morgan Asset Management.

"Our view is that the drag on the services sector from social distancing policies and shock from the fall of the oil price on the energy sector will be enough to tip the US into recession, but not necessarily a long one."

source: news.abs-cbn.com

Global central banks pull out all stops as coronavirus paralyses economies

SYDNEY - The US Federal Reserve and its global counterparts moved aggressively with sweeping emergency rate cuts and offers of cheap dollars to help combat the coronavirus pandemic that has jolted markets and paralysed large parts of the world economy. 

The coordinated response from the Fed to the European Central Bank (ECB) and the Bank of Japan (BOJ) came amid a meltdown in financial markets as investor anxiety deepened over the difficulty of tackling a pathogen that has left thousands dead and put many countries on virtual lockdowns.

The Fed moved first on Sunday, cutting its key rate to near zero in a move reminiscent of the steps taken just over a decade ago in the wake of the financial crisis.

The U.S. decision triggered emergency policy easings by central banks in New Zealand, Japan and South Korea, with Australia also joining with a liquidity injection in a coordinated move aimed at stabilising confidence as the pandemic threatened a global recession.

"The virus is having a profound effect on people across the United States and around the world," Fed Chair Jerome Powell said in a news conference after cutting short-term rates to a target range of 0% to 0.25%, and announcing at least $700 billion in Treasuries and mortgage-backed securities purchases in coming weeks.

The Reserve Bank of New Zealand (RBNZ) slashed rates to a record low as markets in Asia opened for trading this week, while Australia's central bank pumped extra liquidity into a strained financial system and said it would announce more policy steps on Thursday.

Later, the Bank of Japan too eased policy in an emergency meeting, ramping up purchases of exchange-traded funds (ETFs) and other risky assets to combat the widening economic fallout from the coronavirus epidemic.

Neighbouring South Korea stepped in as well with a 50 basis point rate cut in a rare inter-meeting review on Monday.

"I don't think we have reached a limit on how deep we can cut interest rates," BOJ Governor Haruhiko Kuroda said.

"If necessary, we can deepen negative rates further," he added.

"We can continue to pump ample liquidity into the market."

MARKETS RATTLED

The measures did little to calm market nerves though, as Asian shares and U.S. stock futures plummeted, underscoring the fears the health crisis might prove much more damaging to the global economy than initially anticipated.

France and Spain joined Italy in imposing lockdowns on tens of millions of people, while the United States saw school closings, runs on grocery stores, shuttered restaurants and retailers, and ends to sports events.

"Market reactions to each surprise monetary policy easing have been sell first and ask questions later," said Selena Ling, head of treasury research and strategy at OCBC Bank in Singapore.

"The more unprecedented measures by the Fed and other central banks, the more investors worry if (they) know something we don’t... fear remains the crux of the problem here as market players remain unconvinced that monetary policy easing and liquidity injections will solve an essentially healthcare crisis."

Five other central banks cut pricing on their swap lines to make it easier to provide dollars to their financial institutions, ramping up efforts to loosen gummed up funding markets and calm credit markets. They also agreed to offer three-month credit in U.S. dollars on a regular basis and at a rate cheaper than usual.

The move was designed to bring down the price banks and companies pay to access U.S. dollars, which has surged in recent weeks as a coronavirus pandemic spooked investors.

However, analysts say flooding banks with cash at near-zero rates won't help fix dislocations in credit markets caused by fear of lending to businesses with mounting losses, which in turn fuels distrust among banks.

Moreover, analysts at major banks and ratings agencies are predicting a marked downturn in the world economy, and some say a recession is unavoidable.

"We believe that financial markets stress could ultimately be the proverbial 'straw that breaks the camel’s back’, and hence, we continue to monitor these very closely," Fitch Solutions said in a note on Monday, adding its forecasts were subject to "downside risks."

"While we expect to see more major central banks cut interest rates further in a bid to support growth...there are limits to how low they can go."

The People's Bank of China (PBoC), which has rolled out powerful stimulus measures since the outbreak began in the country's Hubei province late last year, was a bit of an outlier as it kept its rates steady, though analysts expected a cut later this week.

(Additional reporting by Winni Zhou and Tom Westbrook; Editing by Shri Navaratnam)

The economic remedies for the coronavirus pandemic

Policymakers and government leaders have taken a range of approaches to deal with the economic fallout from the coronavirus. Here is a list of how some of the world's biggest economies and economic blocs have reacted.

UNITED STATES

President Donald Trump on Wednesday instructed the US Treasury Department to defer tax payments without interest or penalties for certain individuals and businesses negatively impacted, saying it would provide more than $200 billion of additional liquidity to the economy.

Trump also said he was ordering the Small Business Administration to provide capital and liquidity to firms affected by the coronavirus by providing low-interest loans to small businesses in affected states and territories, effective immediately. And he suspended all travel from Europe, with a few exceptions, to the United States for 30 days starting on Friday.

Earlier, Trump signed a $8.3 billion emergency spending bill to combat the spread of the virus and develop vaccines for the highly contagious disease.

The US Federal Reserve has cut interest rates by half a percentage point in its first emergency rate move since the height of the 2008 financial crisis. Investors expect more cuts in the weeks ahead.


CHINA

China said it had earmarked 110.5 billion yuan ($15.9 billion) to fight the epidemic.

Beijing has ramped up funding support for virus-hit regions and the country's central bank has cut several of its key rates, including the benchmark lending rate, and has urged banks to give cheap loans and payment relief to exposed companies.

China will modify the environmental supervision of companies to help the resumption of production disrupted by the coronavirus epidemic, giving firms more time to rectify environmental problems.

JAPAN

Japan unveiled a second package of measures worth about $4 billion in spending to cope with the fallout of the coronavirus outbreak, focusing on support to small and mid-sized firms, as concerns mount about risks to the fragile economy.

Separately, Bank of Japan Governor Haruhiko Kuroda has pledged to pump more liquidity into markets and step up asset buying.

Japan's central bank may also take steps to ensure companies hit by the coronavirus outbreak do not face a financial squeeze before the end of the current fiscal year in March, according to sources familiar with the central bank's thinking.

EUROPEAN CENTRAL BANK

The ECB, the central bank of the euro zone, has so far avoided cutting interest rates. Policymakers did hold an unscheduled meeting on March 3 but it was to discuss operational responses to coronavirus, such as whether to hold events and staff shortages, rather than any policy response, sources close to the matter said.

The ECB has asked euro zone banks to review their business continuity plans and the actions they can take to prepare for and minimize the potential adverse effects of the coronavirus, a letter seen by Reuters shows.

THE EUROPEAN UNION

European Union leaders have so far failed to agree radical measures to tackle the crisis. The head of the bloc's executive Ursula von der Leyen said the European Commission will set up a joint investment fund with firepower of 25 billion euros ($28 billion) from existing resources to cushion the blow to vulnerable sectors of the bloc's economies.


GERMANY

Germany's center-left coalition agreed to increase public investments by 12.4 billion euros by 2024 and to make it easier for companies to claim subsidies to support workers on reduced working hours to counter the effects of the coronavirus epidemic.

Chancellor Angela Merkel's conservatives are split over whether Germany should rush out a fiscal stimulus package to counter any impact of the coronavirus on Europe's largest economy.

Budget experts estimate the government has the fiscal room for additional measures worth at least 17 billion euros ($18.9 billion). Some officials say that Berlin could even put together a stimulus package worth up to 50 billion euros, without ditching the government's policy of no new debt.


BRITAIN

Britain launched a 30 billion-pound ($39 billion) economic stimulus plan just hours after the Bank of England slashed interest rates, a double-barreled package aimed at warding off the risk of a coronavirus recession.

The Bank of England cut interest rates by half a percentage point and offered banks cheaper funding and a reduction in capital buffers in an emergency move to bolster Britain's economy against disruption caused by the coronavirus outbreak.

FRANCE

French Finance Minister Bruno Le Marie has said that Europe needs to be ready to use fiscal stimulus to deal with the impact of the coronavirus.

The government is allowing companies to suspend payments of some social charges and taxes, and is activating state-subsidized short-time work schemes. It has ordered the Bpifrance state investment bank to guarantee loans needed to overcome short-term cash flow problems.

Paris has also allowed companies to declare force majeure due to the outbreak if they cannot honor a contract with the public sector, and is putting pressure on big companies to show similar leniency with subcontractors.

INDIA

The Reserve Bank of India (RBI) plans to infuse fresh cash liquidity into the system through a second round of long-term repo operations (LTRO), government officials told Reuters, amid fears that the coronavirus outbreak will derail any revival of economic growth. One official said the RBI might inject as much as 1 trillion rupees ($13.6 billion) in the round that will begin as early as April.

The RBI has said it stands ready to act to maintain market confidence and preserve financial stability.

The government is, meanwhile, pushing state-run banks to approve new loans amounting to 500-600 billion rupees by the end of March, according to government sources.

ITALY

Italy has doubled the amount it plans to spend on tackling its coronavirus outbreak to 7.5 billion euros ($8.4 billion) and is raising this year's deficit goal to 2.5 percent of national output from the current 2.2 percent target.

Payments on mortgages will be suspended across the whole of Italy and Italy's banking lobby ABI said lenders would offer debt moratoriums to small firms and households grappling with the economic fallout from the virus.

CANADA

Finance Minister Bill Morneau said on March 9 that the government was "looking at taking some initiatives this week," as Canada reported its first coronavirus death, with a steep decline in oil prices expected to hit the world's fourth-largest crude producer hard.

The Bank of Canada lowered its benchmark overnight rate to 1.25 percent from 1.75 percent in response to the epidemic, prompting money markets to price in a better-than-even chance of another reduction next month. The last time it cut by 50 basis points was in 2009 during the financial crisis.

SOUTH KOREA

The government announced a stimulus package of 11.7 trillion won ($9.8 billion) to cushion the impact of the largest outbreak of coronavirus outside China.

Finance Minister Hong Nam-ki said the supplementary budget, subject to parliamentary approval, would channel money to the health system, childcare, and outdoor markets. An additional 10.3 trillion won in treasury bonds will be issued this year to fund the extra budget.

Seoul has also dramatically tightened rules on short-selling for three months. Starting March 11, stocks with a sudden and abnormal increase in short-selling transactions will be suspended from further short-selling for 10 days.

source: news.abs-cbn.com