European Shares Set For Further Losses

European stocks are seen opening sharply lower on Monday after data showed
Chinese industrial production for January and February shrank 13.5 percent, marking the first contraction in around 30 years amid a widespread shutdown of manufacturing operations.

Retail sales, a key metric of consumption in the world’s second largest economy, fell by 20.5 percent, marking the first decline on record. Fixed asset investment was down 24.5 percent versus a 5.4 percent rise in January to December 2019.

The coronavirus outbreak has now infected almost 170,000 people and killed more than 6,000 with several countries going into lockdown as Europe becomes the new epicentre of the outbreak.

WHO chief Tedros Adhanom Ghebreyesus said in a virtual press conference on Friday that it was impossible to tell when the pandemic would peak globally.

More cases are now being reported every day than were reported in China at the height of its epidemic,” he added, referring to the global numbers.

Asian markets fell sharply, U.S. stock futures declined and bonds rallied as recession worries escalated.

The dollar fell against a broad range of currencies after the U.S. Federal Reserve cut interest rates to almost zero in another emergency move to shore up the world’s largest economy.

It is part of a coordinated action announced on Sunday in the U.K., Japan, eurozone, Canada, and Switzerland. The U.S. central bank also unveiled a massive asset-buying program, similar to measures put into place during the global financial crisis.

Earlier today, New Zealand’s central bank followed suit by slashing interest rates by 75 basis points to a record low in an attempt to cushion the economic blow.

The People’s Bank of China offered CNY 100 billion or $14.3 billion into the financial system via one-year medium-term lending facility today, but kept its borrowing cost unchanged.

The central bank last week had reduced the reserve requirement ratio by 50-100 basis points for qualifying banks to shore up the economy hit by the outbreak of covid-19.

U.S. crude futures were down over 3 percent at $31.11 per barrel after slipping below $30 earlier in the session.

U.S. stocks saw a late-day rally on Friday to end sharply higher after President Donald Trump declared the coronavirus outbreak a national emergency, a development that would free up as much as $50 billion in additional funding to combat the outbreak and allow officials to waive certain regulations to accelerate testing and care for coronavirus patients.

Markets also reacted positively to reports that a coronavirus test developed by Swiss drug giant Roche has been granted emergency use authorization by the FDA.

The Dow Jones Industrial Average soared 9.4 percent, while the tech-heavy Nasdaq Composite and the S&P 500 climbed around 9.3 percent each.

European markets also closed higher on Friday after suffering one of their worst setbacks in several years the previous day.

The pan European Stoxx 600 gained 1.4 percent. The German DAX rose 0.8 percent, France’s CAC 40 index rallied 1.8 percent and the U.K.’s FTSE 100 jumped 2.5 percent.

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