BANGKOK (AP) — U.S. futures jumped and global stock benchmarks trimmed losses Monday after the Federal Reserve said it will lend to small and large businesses and local government to help them cope with the economic damage created by the coronavirus pandemic.
Wall Street futures swung from losses to trade over 2% higher. European markets pushed higher after starting the day sharply lower. Germany’s DAX rose 1.5% to 9,059 and Britain’s FTSE 100 was flat at 5,190. In Paris, the CAC 40 rose 1% to 4,087.
In a series of sweeping steps, the Fed said it will set up three new lending facilities that will provide up to $300 billion by purchasing corporate bonds, buying a wider range of municipal bonds, and purchasing asset-backed securities. It also says it will buy an unlimited amount of Treasury bonds and mortgage-backed securities in an effort hold down interest rates and ensure those markets function smoothly.
That helped shore up market sentiment after broad losses in Asian trading hours.
India’s Sensex plummeted 11.3% after a sharp drop on the open triggered a circuit breaker halt to trading. Singapore’s benchmark plunged 7.8% after the city-state announced a sharp increase in confirmed infections and its first two deaths. Shares also fell nearly 8% in Bangkok.
Japan’s Nikkei 225 index was the outlier, gaining 2.0% after the International Olympic Committee and Japanese officials indicated they are considering postponing the Tokyo Games, due to begin in July.
Japan’s Prime Minister Shinzo Abe acknowledged that a postponement of the 2020 Tokyo Games could be unavoidable as Canada and Australia added to the immense pressure that has been mounting on organizers by saying they wouldn’t send athletes to Tokyo unless the Olympics are postponed for a year.
In the U.S., top-level negotiations between Congress and the White House continued after the Senate voted against advancing a nearly $2 trillion economic rescue package. Another vote was expected Monday.
The Democrats said the bill was tilted too much toward aiding corporations and would not do enough to help individuals and healthcare providers weather the crisis brought on by the pandemic.
Lockdowns and closures intended to halt the spread of the new coronavirus expanded over the weekend to include many cities around the world and the number of people infected surged past 336,000.
Sydney’s S&P/ASX 200 fell 5.6% to 4,546.00 after plunging more than 8% sharply just after the open. Australia announced a 66.4 billion Australian dollar ($38.5 billion) stimulus package on Sunday. That’s in addition to an earlier mandated $10 billion package and other stimulus from the central bank.
South Korea’s Kospi lost 5.3% to 1,482.46. Hong Kong’s Hang Seng index shed 4.9%, to 21,696.13, while the Shanghai Composite index slipped 3.1% to 2,660.17. The Nikkei closed at 16,887.78.
Stocks fell sharply on Wall Street and the price of oil sank again Friday as New York became the latest state to decide that nearly all workers should stay home to limit the spread of the coronavirus. California and several other states in the U.S. and a growing number of countries have also imposed limits on business activity.
This week will bring fresh data that are likely to underscore the damage to Asian economies from the outbreak of the virus that originated in China.
A sharp surge in cases and in deaths across the region, especially in Southeast Asia, have also raised the level of alarm.
Shutdowns mean less demand for oil. U.S. crude has dropped about 21%, dipping below $20 a barrel last week for the first time since February 2002. On Monday, benchmark crude was revived by news of the Fed aid. It was down 79 cents at $23.42 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, trimmed some losses and was trading down 44 cents to $26.54 per barrel.
Ultimately, investors say they need to see the number of new infections stop accelerating for the market to end its prolonged, bouncing tumble to lows not seen for a decade.
The S&P 500, the benchmark for many index funds held in retirement accounts and the measure preferred by professional investors, is down 31.1% since reaching a record high a month ago. Last week marked its biggest weekly loss since October 2008 during the global financial crisis.
Investors have continued to seek safety in U.S. government bonds, driving their yields broadly lower. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, slid to 0.74% Monday from 0.94% late Friday.
At nearly $2 trillion, the U.S. rescue package is the biggest effort yet to aid households and shore up the U.S. economy, the world’s biggest.
But markets have continued to fall as scores of other governments and many central banks have acted as they try to stave off or at least alleviate the impact of a recession.
Many investors are waiting for markets to fall further before plunging back in, said Naeem Aslam of Avatrade.
Should the market drop by another 10% to 20%, the overall decline from recent peaks would be over 50%, and “that would be a massive buy signal,” Aslam said.
Meanwhile, demand for the U.S. dollar has been soaring. The dollar was at 110.26 Japanese yen on Monday, down from 110.83 yen late Friday.
The euro rose to $1.0755 from $1.0697.
More than 14,400 people have died of the coronavirus worldwide, while nearly 100,000 people have recovered.
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.