TOKYO- Global shares and oil prices extended their rebound on Tuesday on mounting speculation policymakers around the world would move to ease the economic fallout from the spreading coronavirus, ahead of a conference call by Group of Seven heads.
Finance ministers from the group are expected to hold a conference call on Tuesday (1200 GMT), sources said, to discuss measures to deal with the economic impact of the coronavirus outbreak.
“There are hopes that G7 countries will take some sort of coordinated actions to fight the virus, possibly including fiscal spending,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
The European Central Bank on Monday joined the chorus of central banks signaling a readiness to deal with the growing threats from the outbreak.
Earlier messages from the US Federal Reserve that it was prepared to act weighed on the greenback against many other major currencies.
The improved mood supported US S&P 500 futures, which rose 0.3 percent in early Asian trade on Tuesday, a day after the S&P 500 gained 4.60 percent, the biggest gain since December 2018.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.0 percent.
South Korea’s Kospi added 1.3 percent and Australian shares advanced 1.6 percent ahead of an expected rate cut by the Reserve Bank of Australia.
Japan’s Nikkei lost steam after short-covering ran its course, trading almost flat having given up earlier gains of 1.8 percent.
The rout in global stocks last week had already prompted Fed Chair Jerome Powell and Bank of Japan Governor Haruhiko Kuroda to flag a readiness to move.
Money markets are fully pricing in an cut of at least 0.25 percentage point to the current 1.50 percent-1.75 percent target rate at the Fed’s March 17-18 meeting as well as a 0.10 percentage point cut to the ECB’s key rate at March 12 meeting.
The frantic moves by policymakers reflected growing fears that the disruption to supply chains, factory output and global travel caused by the new epidemic could deal a serious blow to a world economy trying to recover from the US-China trade war.
The Organization for Economic Cooperation and Development on Monday cut its forecast of global economic growth this year to 2.4 percent, the lowest since 2009 and down from a forecast of 2.9 percent in November. — Reuters
