The wild volatility of the oil market, where prices rebounded in Asia after falling on Tuesday, did not help sentiment, leaving traders stunned as they weighed the likelihood of production cuts by major producers.
Crude oil futures in the United States jumped 5.4% to $ 24.92 a barrel, after losing 9.4% the previous session, while Brent crude added 74 cents to 32.61 $.
The erratic action spilled over into stocks, with MSCI’s largest Asia-Pacific index excluding Japan losing 0.5%.
“The recent upswing in risk has quickly waned despite recent efforts to boost both monetary and fiscal authorities, as market players have accepted the continuing rise in deaths as the virus continues to spread,” economists said. ‘ING Prakash Sakpal and Nicholas Mapa in a note on Wednesday.
The Japanese Nikkei was volatile, becoming positive with a gain of 0.53% after losing 0.7% earlier. Prime Minister Shinzo Abe announced a $ 1 trillion stimulus package on Monday to help households and businesses cope with the effects of the coronavirus epidemic.
South Korea’s Kospi index fell 0.26%, while Hong Kong’s Hang Seng index lost 1.01%.
The Shanghai Chinese composite index fell 0.58% after a jump in new coronavirus infections the northern province of Heilongjiang highlighted the continuing risks posed by the pandemic, even as the country eases some travel restrictions.
US benchmark S&P 500 E-Mini futures lost early gains to fall 0.7% as investors benefited from the recent surge in profits.
“There is reason to be cautious because it seemed like a relief before the start of next week’s first quarter income season and before the data reveals the depth of the impact of the virus,” said JPMorgan analysts in a note.
“The data shows that the recent rate hike has been accompanied by short-term hedging and derisque rather than active long-term risk taking. The short cover is when traders have to buy back stocks they had borrowed assuming their prices would drop.
The S&P 500 ended Tuesday down 0.16%, after increasing 3.5% at some point. The Nasdaq fell 0.33% and the Dow 0.12%.
After the U.S. equity markets closed, President Donald Trump said the U.S. could reach the top of the coronavirus curve.
The Trump administration has asked Congress for an additional $ 250 billion in emergency economic assistance for US small businesses shaken by the pandemic.
“As the” virus curve flattens “, the economic effects of the corona crisis will persist for years,” economist Joseph Capurso of the Commonwealth Bank of Australia said in a note.
“The economies will take time to reopen, some companies will not reopen and unemployment will take years to return to the levels announced in late 2019”.
Credit rating agency S&P Global warned on Wednesday that the cost of fighting the virus would weigh heavily on Australia’s finances and changed the outlook for the country’s rating to negative.
This lowered the Australian dollar by 0.6% to $ 0.6191 and affected the overall sense of risk. The US dollar fell 0.1% on the safe haven to 108.60, while the euro fell to $ 1.0877.
Against a basket of currencies, the dollar edged up 0.1% to 100.070.
Gold prices – considered a refuge in a crisis – fell to $ 1,644 an ounce after hitting a three-and-a-half week high on Tuesday at $ 1,671.