Asian stocks fall on new crude oil price rout

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TOKYO / NEW YORK (Reuters) – Asian stocks and US equity futures plunged into red on Tuesday, erasing previous gains as further declines in oil prices overshadowed optimism about easing worldwide coronavirus restrictions.

FILE PHOTO: People wearing protective masks, following a coronavirus outbreak, are reflected on a screen showing the Nikkei index, outside a brokerage in Tokyo, Japan on 28 February 2020. REUTERS / Athit Perawongmetha

The largest MSCI Asia Pacific index excluding Japan. MIAPJ0000PUS was down 0.3%. Chinese stocks .CSI300 fell 0.7% and South Korean stocks .KS11 fell 0.22%.

Oil futures fell after the largest US-traded fund announced that it would sell all of its first month crude oil contracts to avoid further losses as prices plummet.

Some investors hope the worst will be over for the global economy, as more countries allow companies to reopen, but others see reasons to remain cautious, especially since a coronavirus vaccine has failed yet been developed.

“We are less optimistic and expect a slower recovery in the global economy,” said the Commonwealth Bank of Australia in a research note.

“The risk of reintroduction of restrictions is a risk to the optimistic outlook of market participants regarding a rapid resumption of normal economic activity. “

The top three US stocks rose on Monday and are all below 20% of their record highs for February.

The S&P 500 benchmark is on track for its best month since 1987, after trillions of dollars in stimulus have helped US stocks recover much of the ground lost since the coronavirus crisis hit the economy at a standstill.

But some analysts believe the gains could be limited unless progress is made in finding treatments for the disease.

From Italy to New Zealand, governments have announced that the restrictions will be relaxed, while Britain has said it is too early to relax them. New York State should not reopen for weeks.

Oil prices fell again due to lingering concerns about oversupply and lack of storage space. The first month contract traded at below normal volumes on Monday, with traders moving into the following months in the futures contracts.

US crude CLc1 slipped 14.24% to $ 10.96 per barrel while Brent crude LCOc1 fell 4.05% to $ 19.18 per barrel.

United States Oil Fund LP (USO.P), the country’s largest gross ETF, fell more than 16% on Monday after announcing it would sell all of its first month crude contracts to avoid repeating the heavy losses suffered last week.

The US dollar and the euro were little changed, traders refrained from taking big positions before a Federal Reserve political decision on Wednesday and a meeting of the European Central Bank (ECB) on Thursday.

The Fed has already announced a series of measures to soften the economic blow of the coronavirus pandemic and is expected to remain on hold this week.

The ECB is likely to expand its debt purchases to include junk bonds and provide a safety net for corporate financing.

The major central banks have responded to the economic crisis caused by the coronavirus by reducing interest rates, buying more public debt and taking steps to increase lending to small businesses.

Elsewhere in foreign currencies, the Australian dollar AUD = D3 traded near a six-week high of $ 0.6472, as investors continued to applaud the country’s progress in controlling the coronavirus.

Gold, a safe haven often bought in times of uncertainty, fell for the third consecutive trading session as a sign of improved risk appetite.

Report by Stanley White in Tokyo and Chibuike Oguh in New York; Editing by Sam Holmes

Our standards:Principles of the Thomson Reuters Trust.

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