Most Asian equities retreated on Wednesday after a two-day rally as investors closely track developments in the coronavirus crisis, while the oil market continued to fluctuate ahead of a crucial producers’ meeting.
While the deadly disease continues to sweep across the planet, signs that the rate of infections is possibly levelling out and countries are preparing to ease some lockdown restrictions have instilled a semblance of optimism this week.
However, the scale of the fight was laid bare by official data showing France’s economy suffered its worst contraction during the first three months of this year since just after World War II.
The French central bank said that in the last two weeks of March, as the coronavirus crisis deepened, economic activity plunged 32 per cent.
AxiCorp global market strategist Stephen Innes said: “Signs that the number of new daily coronavirus cases is topping out in Western Europe . . . is driving expectations that social distancing measures will be lifted soon.
However, uncertainty about how long the crisis will last and the damage it will inflict on the global economy was keeping traders on edge and hobbling any sustainable rally.
Hong Kong lost more than one per cent, Singapore two per cent, and Sydney and Seoul each 0.9 per cent. Shanghai ended down 0.2 per cent, while Bangkok, Manila and Jakarta also saw steep falls.
Meanwhile, the Cambodia Securities Exchange index climbed 2.18 per cent.
Tokyo, however, rose more than two per cent as Japan’s government unveiled details of a 108 trillion yen ($992 billion) stimulus package, and Taipei piled on 1.4 per cent. Wellington also rose and Mumbai was flat.
Oanda’s Jeffrey Halley offered a warning for traders to beware any false dawn.
Oil prices rallied, but the commodity continues to swing as traders keenly await Thursday’s planned meeting of the world’s top producers, which will discuss a possible output cut.
The commodity has been battered by the virus as lockdowns around the world bring the global economy to a standstill and drag on demand, while a price war between Russia and Saudi Arabia has compounded the crisis.
With Riyadh and Moscow taking part, there are hopes they may draw a line under their dispute.
AxiCorp’s Innes said current figures being discussed point to an output cut of 10 million barrels per day for the Opec-led alliance – but cautioned this may not be enough as the virus saps global demand.
Investors were also keeping tabs on talks in Europe where leaders are struggling to agree a path to supporting the region’s economy, with the EU’s 27 members unable to agree to a solidarity fund using “coronabonds”.