Asia Equity Market Trends Weaker

Asia Equity Market Trends Weaker

Markets

More expansionary monetary policy is expected globally, although central banks cannot deaden the supply-side disruptions caused by the COVID-19 outbreak. On the demand side, the impact is negative but to an unquantifiable degree, apparently suggesting that some central banks may prefer to wait before cutting rates. But this could be a mistake as they can’t possibly take the chance for this thing to get worse.

Whether markets view lower interest rates as the solution to weaker virus-impacted activity is another matter. And this is a significant concern as if Fed monetary policy can’t paper over the cracks as a short-term fix; the global capital markets will be on a world of hurt

The wicked moved in US yields, with the 10-year coat-tailing the 30-year in plumbing new all-time lows over the past 12 hours, is foreshadowing a growth shock of the magnitude not seen before.

The S&P 500 is down ~8% since Feb 19 as the ‘buy the dip’ mentality has long left the playbook for US equities, which have historically been supported by a dovish Fed.

Asia’s equity markets are trending weaker, albeit in a more contained fashion than the selloff in US markets overnight probably due to the extraordinary focus on reverse Yankee mania with the virus arriving at the US markets doorstop

Asia Equity Market Trends Weaker

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