Asian stocks struggled to find their footing in volatile trade on Thursday, as the latest promise of stimulus from the European Central Bank propped up sentiment while the world struggles to contain the coronavirus pandemic.
U.S. stock futures turned positive and rose nearly 2% after the ECB announced a bond-buying programme. Japan’s Nikkei opened 1.4% higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.25% amid choppy trade throughout the region, with Australia’s benchmark running as much as 3% higher before returning to flat and Korea’s Kospi gyrating.
The ECB will buy 750 billion euro ($820 billion) in bonds through 2020, with Greek debt and non-financial commercial paper eligible under the programme for the first time.
Overnight on Wall Street, the S&P 500 fell 5% and is down nearly 30% over a month. Household-name blue chips plunged, with General Motors and Boeing, each symbols of U.S. industrial might, losing more than 17% in a single day.
Benchmark U.S. 10-year Treasuries, usually a haven in times of turmoil, suffered their sharpest two-day selloff in nearly 20 years. Gold is down 3% for the week and oil fell to an 18-year low as quarantine lockdowns spread across the globe.
In currency markets, the dollar is king and jumped to a three-year high overnight amid a rush for the world’s reserve currency in times of crisis.
On Wednesday, the virus outbreak worsened. Italy reported the largest single-day death toll from coronavirus since the outbreak began in China in late 2019.
It has killed more than 8,700 people globally, infected more than 212,000 and prompted emergency lockdowns on a scale not seen in living memory.
The ECB’s move follows emergency interest rate cuts around the globe, enormous fiscal support packages and six central banks promising discount dollars to banks to alleviate a squeeze in greenback funding.
But so far none of it has been able to put a floor under dire sentiment, and some $15 trillion in shareholder value has been wiped out in little more than a month of heavy selling.
The U.S. economy could shrink 14% next quarter, a JP Morgan economist said on Wednesday, one of the most dire calls yet on the potential hit to the United States.