Worldwide: Headlines
Dow slides more than 1,800 points on fears of coronavirus resurgence, more economic pain
The Wall Street sell-off contrasted sharply with just a few days ago, when the Nasdaq set a record high and the S&P 500 went positive for the year.
The stock market slid sharply Thursday, with the Dow Jones industrial average shedding 1,861.82 points, or 6.9 percent, as suddenly renewed fears about the coronavirus’s impact on the economy startled Wall Street and the White House.
President Trump and his top economic aides fanned out quickly to try to beat back the growing concern. They assailed the Federal Reserve for its recent projection that the unemployment rate will remain elevated well into next year. The Trump administration also pushed back on the idea that it would allow the economy to shut down again in the face of rising cases.
Over three days, the Dow has lost roughly 9 percent. The index peaked in mid-February at 29,551 before falling sharply to 18,592 over more than a month. It had rebounded strongly before this week’s slide, and there was a sense Thursday that perhaps the stock market had come back too far, too fast, without the economic underpinnings to justify such a climb.
“The market had become more optimistic and more enamored over a V-shaped recovery in recent weeks,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab. “Anything that would disrupt that view was a vulnerability. And that’s exactly what we’ve seen in the last day and a half. The potential for a second virus wave and another lockdown is a worry. And there is concern over a possible slower pace of recovery.”
The stock market has risen sharply since late March in part because of extraordinary assistance from the Fed and Congress to flood the U.S. economy with money in an attempt to arrest the downturn caused by the coronavirus pandemic. Trump follows the stock market closely and views it as a measure of his presidency’s success, and he had recently dubbed Fed Chair Jerome H. Powell, whom he had derided, as the “most improved player.”
Trump turned on the Fed on Thursday, though, after the stock market’s slide picked up in velocity. He tried to dispute Powell’s assertion Wednesday that the economy could take a long time to heal and need substantial government help.
Full Coverage: The Washington Post
Oil prices extend slump as U.S. coronavirus cases climb
TOKYO (Reuters) – Oil prices slid early on Friday, extending heavy overnight losses on a surge in U.S. coronavirus cases this week that has raised the prospect of a second wave of the outbreak slamming demand in the world’s biggest consumer of crude and fuel.
West Texas Intermediate CLc1 was down $1.32, or nearly 4%, at $35.02 a barrel by 0011 GMT, after slumping more than 8% on Thursday. Brent crude LCOc1 was down $1.15, or 3%, at $37.40 a barrel, having dropped nearly 8% the previous session.
A rally off April’s lows has come to a shuddering halt this week as the market faced the reality that the coronavirus pandemic may be far from over globally, with cases in the United States alone passing 2 million this week.
Brent is heading for its first weekly decline in seven, dropping about 12%, while U.S. crude is heading for a loss of around 4% in its second consecutive weekly drop.
“A sustainable rally needs to include improving gasoline demand, reducing inventories, increasing product margins to the point where refiners kickstart runs,” RBC Capital Markets said, noting that “U.S. driving patterns are far from normal.”
While producers have been cutting supply, demand remains constrained by the outbreak, with gasoline stockpiles in the U.S. last week rising more than expected to 258.6 million barrels, according to government data.
Full Coverage: Reuters
North Korea says little reason to maintain Kim-Trump ties: KCNA
SEOUL (Reuters) – North Korea sees little use maintaining a personal relationship between leader Kim Jong Un and U.S. President Donald Trump if Washington sticks to hostile policies, state media reported on Friday – the two-year anniversary of the leaders’ first summit.
U.S. policies prove Washington remains a long-term threat to the North Korean state and its people and North Korea will develop more reliable military forces to counter that threat, Foreign Minister Ri Son Gwon said in a statement carried by state news agency KCNA.
Trump and Kim exchanged insults and threats during 2017 as North Korea made large advances in its nuclear and missile programme and the United States responded by leading an international effort to tighten sanctions.
Relations improved significantly around the Singapore summit in June 2018, the first time a sitting American president met with a North Korean leader, but the statement that came out of the meeting was light on specifics.
A second summit in February 2019 in Vietnam failed to reach a deal because of conflicts over U.S. calls for North Korea to completely give up its nuclear weapons, and North Korean demands for swift sanctions relief.
Ri said in retrospect the Trump administration appears to have been focusing on only scoring political points while seeking to isolate and suffocate North Korea, and threatening it with preemptive nuclear strikes and regime change.
Full Coverage: Reuters
Asian stocks set to fall sharply as Wall Street tumbles
NEW YORK (Reuters) – Asian equities are set to fall sharply on Friday after Wall Street stocks and oil tumbled over growing concerns that a resurgence of coronavirus infections could stunt the pace of reopening economies.
The three major U.S. stock indexes fell more than 5%, posting their worst day since mid-March, when markets were sent into freefall by the abrupt economic lockdowns put in place to contain the pandemic.
“All of a sudden the coronavirus, which has been an also-ran story for some days now, became more important as the virus began picking up in some states, and the market began thinking there may be delays to reopening,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
Australian S&P/ASX 200 futures were down 3.04% at 20:59 GMT, while Japan’s Nikkei 225 index closed down 2.82% at 22,472.91 on Thursday. Hong Kong’s Hang Seng index futures were down 2.06%.
Cases of the disease have jumped in several U.S. states in recent days, raising concern among experts who say authorities have loosened restrictions put in place to contain the spread too early.
Cases in New Mexico, Utah and Arizona rose by 40% for the week ended Sunday, a Reuters tally shows. Florida and Arkansas are other hot spots.
Full Coverage: Reuters
As China tensions mount, Australia’s dovish voices calling for engagement are fading away
When Australia first proposed an international inquiry into the origins of the coronavirus pandemic, which would send relations with China to their lowest ebb in years, reaction at home was mixed.
Kerry Stokes, one of the country’s richest tycoons, used a front page interview in the April 30 edition of the West Australian newspaper he owns to warn against poking “our biggest provider of income in the eye”, while mining magnate Andrew Forrest called for any investigation to be delayed.
Former foreign ministers Bob Carr and Gareth Evans criticised Canberra for creating unnecessary tensions by turning an otherwise reasonable search for answers into a public spectacle, instead of engaging in quiet diplomacy. In Victoria, meanwhile, state treasurer Tim Pallas accused the federal government of vilifying the country’s largest trading partner and leaving local exporters to deal with the inevitable fallout.
But as Beijing has continued to ramp up the pressure on key sectors of Australia’s economy, voices urging understanding of China’s position have all but evaporated from a national conversation that has long been informed by both hawkish and dovish sentiment.
After earlier slapping restrictions on imports of Australian beef and barley, Beijing’s recent warnings to its citizens against travelling or studying in the country have caused indignation and dismay to the extent that even observers known for their diplomatic views on China have struggled to see the other side.
James Laurenceson is the director of the Australia-China Relations Institute, which was set up with a donation by Chinese billionaire real estate developer Xiangmo Huang and continues to receive support from China Construction Bank. He said there were now “next to no voices sympathetic to Beijing’s latest salvoes”, in contrast to the range of “respected” voices who had argued for engagement with Beijing before the inquiry was proposed.
Full Coverage: South China Morning Post
US is waging financial war to stop China’s rise, says veteran politician
China must be vigilant as the US is waging a calculated financial war to curb its rise, outspoken former Chongqing mayor Huang Qifan has said.
Speaking to a group of business students at a webinar organised by the Xiamen University alumni association on Wednesday, Huang warned that while some steps taken by the US might appear chaotic, they were in fact highly calculated.
“Some may say that the politicians and senators might seen to be making a lot of noise and what they say appears to be a mess … but actually there are well-calculated moves behind the scenes,” he said.
“They are in fact a combination of moves in a systematic game plan.”
The 68-year-old former mayor, who is now a deputy director of the China Centre for International Economic Changes, a Beijing-based think-tank, said these steps could be traced to the 2015 Trade Promotion Authority (TPA) Act passed by the US Congress in 2015.
“There is a section in the TPA which says the US government can undertake a series of measures amounting to trade and financial war against any countries that have been designated by the US Treasury as a currency manipulator,” Huang said.
For example, Huang said the TPA empowers the US government to stop trading with any targeted countries, disallow companies from these countries from participating in US financial markets and ban American banks and financial companies from doing business with these countries.
Full Coverage: South China Morning Post
Study warns of poverty surge to over 1 billion due to virus
LONDON (AP) — Global poverty is set to rise above 1 billion people once again as a result of the coronavirus pandemic, which is reducing the income of the world’s poorest by $500 million a day, according to new research published Friday.
The research by King’s College London and the Australian National University points to poverty increasing dramatically in middle-income developing countries, where millions of people live just above the poverty line.
Asian countries, such as Bangladesh, India, Indonesia, Pakistan and the Philippines, are considered to be particularly vulnerable to the pandemic’s economic shockwaves with lockdowns severely curtailing activity.
“The pandemic is fast becoming an economic crisis for developing countries,” said Andy Sumner, a professor of international development at King’s College London and one of the report’s co-authors.
Because millions of people live just above the poverty line, they are in a precarious position as the economic shock of the pandemic plays out. In a worst case scenario, the number of people in extreme poverty – defined as earning under $1.90 a day – is forecast to rise from about 700 million to 1.1 billion, according to the report, which was published by the United Nations University World Institute for Development Economics Research.
“Without action this crisis could set back progress on reducing global poverty by 20 or even 30 years,” Sumner said.
Researchers are calling for “urgent global leadership” to address the crisis. But hopes are low after the Group of Seven meeting of world leaders, which was due to take place June 10-12 at President Donald Trump’s retreat at Camp David, was postponed. Trump now aims to host an expanded meeting in September, also including leaders from Russia, Australia, South Korea and India. How much development issues will be addressed at that summit remains an open question.
Full Coverage: AP
China to ease rules on listings for its Nasdaq-like ChiNext board this year
BEIJING (BLOOMBERG) – It will soon be a lot easier for mainland firms to list on China’s volatile ChiNext board, the nation’s Nasdaq-style board of growth enterprises.
The regulator will unveil rules to adopt so-called registration-based initial public offerings on the ChiNext by the end of June, and implement them this year, according to a statement by the State Council on Thursday (June 12). The proposal, announced in April, could cut the review period for listing to months from years, and would scrap limits on price moves for the first five trading days.
China’s securities regulator had been considering making such reforms to the world’s second-largest stock market since at least 2013, when it pledged to move toward a US-style IPO registration system. Last year, the country rolled out a stock board in Shanghai which was seen as a testing ground for relaxed listing and trading rules.
The move comes at a time when increasing numbers of US-listed Chinese firms are seeking to sell shares in Hong Kong amid growing tensions between Beijing and Washington. China’s No 2 online retailer JD.com raised HK$30.1 billion (S$5.4 billion) in its Hong Kong share sale, people familiar with the matter said, cementing the world’s second-biggest listing this year.
Full Coverage: The Straits Times
