Asian shares slid on Monday and oil prices took another tumble as fears mounted that the global shutdown for the coronavirus could last for months, doing untold harm to economies despite central banks’ best efforts.
“We continue to mark down 1H20 global GDP forecasts as our assessment of both the global pandemic’s reach and the damage related to necessary containment policies has increased,” said JPMorgan economist Bruce Kasman.
They now predict global GDP could fall at a 10.5% annualized rate in the first half of the year.
There was much uncertainty about whether funds would have to buy or sell for a month- and quarter-end to meet their benchmarks, many of which would have been thrown out of whack by the wild market swings seen over March.
E-Mini futures for the S&P 500 skidded 1.2% right from the bell, and Japan’s Nikkei 3.7%. EURO STOXX 50 futures fell 0.6% and FTSE futures 1.3%.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.1%, while Shanghai blue chips shed 1.4%.
Central banks have mounted an all-out effort to bolster activity with rate cuts and massive asset-buying campaigns, which have at least eased liquidity strains in markets.
China on Monday became the latest to add stimulus with a cut of 20 basis points in a key repo rate.
Singapore also eased as the city-state’s bellwether economy braced for a deep recession, while New Zealand’s central bank said it would take corporate debt as collateral for loans.
Rodrigo Catril, a senior FX strategist at NAB, said the main question for markets was whether all the stimulus would be enough to help the global economy withstand the shock.
It was not encouraging, then, that British authorities were warning lockdown measures could last months.
U.S. President Donald Trump on Sunday extended guidelines for social restrictions to April 30, despite earlier talking about reopening the economy for Easter.
Japan on Monday expanded its entry ban to include citizens traveling from the United States, China, South Korea and most of Europe.