- Risk appetite returns to markets, pushing major Asian equities higher.
- Chinese stocks are up nearly 2% despite growth concerns.
Asian stocks are flashing green with investors returning to risk assets on hopes the coronavirus would not lead to a prolonged slowdown in the global economy.
At press time, Japan’s Nikkei index is adding 1.64% and stocks in South Korea and Australia are reporting moderate gains. While the futures on the S&P 500 are reporting marginal losses, The Shanghai Composite index is printing nearly 2% gain and Hong Kong’s Hang Seng is adding 1.76%.
Chinese stocks are gaining altitude despite forecasts for a sharp slowdown in the first quarter. Goldman Sachs recently revised lower its forecast for China’s first-quarter GDP growth rate to 4% from 5.6%.
While most economists have revised lower their forecasts for China’s gross domestic product (GDP) on coronavirus scare, they are still struggling to assess the impact on the global economy.
Reserve Bank of Australia’s (RBA) governor was out on the wires earlier Wednesday, downplaying fears of deeper economic slowdown due to coronavirus.
Also, investors seem to have taken heart from China’s decision to inject $174 billion of liquidity on Monday. Goldman Sachs analysts expect Chinese policymakers to provide more debt-intensive stimulus in the near future.
The risk reset in the financial markets is accompanied by an uptick in oil prices. WTI crude is currently up 1.19% and Brent is adding 1.5%. Meanwhile, the US 10-year treasury yield is sidelined around 1.59%, having jumped from 1.52% to 1.61% on Tuesday, tracking the solid rise in the US equity markets. USD/JPY is reporting marginal losses near 109.45, having jumped by 0.80% on Tuesday.
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