13/3/2020 (44) Global stock sell-off eases after worst Wall Street rout since 1987 | Financial Times

Markets Briefing Markets

Global stock sell-off eases after worst Wall Street rout since 1987
Shares reverse sharp losses as central banks unveil new action to combat coronavirus

Japan's Topix plunged more than 9 per cent shortly after opening on Friday © AP

Hudson Lockett in Hong Kong, Leo Lewis in Tokyo and Philip Georgiadis in London 6 MINUTES
AGO

The rout in global shares eased on Friday, as central banks launched new liquidity
measures to stem another punishing week of selling prompted by the coronavirus.

European markets recorded gains at the open, with London’s FTSE 100 rising nearly 3
per cent after shedding a tenth of its value on Thursday, and the Stoxx Europe 600 up
more than 3.5 per cent following its worst single session in history when it fell more
than 11 per cent.

US stock futures pointed higher following the largest one-day fall on Wall Street since
1987 as markets sank 10 per cent in a brutal sell-off.

Daily swings of several per cent have become commonplace in global markets over the
past weeks, as traders grapple to price the economic disruption from the coronavirus
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impact and central banks step in to try to support markets and economies.

Central banks launched new liquidity measures to try to stem another punishing week
of selling prompted by the coronavirus.

Norway’s central bank cut interest rates and added liquidity to the market on Friday,
while the Bank of Japan bought billions of dollars of Japanese government bonds and
the Reserve Bank of Australia injected A$8.8bn ($5.6bn) into the financial system.

Markets in Asia-Pacific staged wild moves on Friday, with Sydney’s S&P/ASX 200
swinging more than 12 per cent intraday.

Japan’s Topix index closed 5 per cent lower after earlier trading down as much as 9 per
cent on Friday. In Australia the S&P/ASX 200 closed 4.4 per cent higher after earlier

plunging 8 per cent.

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Traders in Tokyo said that the RBA move triggered the reversal in the Topix as hedge
funds and leveraged retail investors tried to make a “fast and dangerous buck” after the
huge declines earlier in the day.

“People could see the market turning up a bit and wanted to close down all the short
positions they had built during the week and take the profits while they could,” said a
dealer at one of Japan’s biggest securities houses.

Overnight, US stocks fell almost 10 per cent after US president Donald Trump banned
Europeans from travelling to the US in an attempt to halt the spread of Covid-19.
Markets in Europe suffered similarly steep falls.

After central banks moved, futures trading pointed to a rise of 1.9 per cent for the S&P
500 when Wall Street opens later on Friday. They had previously tipped to fall of more
than 3 per cent.

Elsewhere, China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks finished
trading down 1.4 per cent while the Hang Seng was off 1.4 per cent, with both indices
staging sharp recoveries from earlier losses.

Earlier central bank action had failed to

Coronavirus business
impress investors. The Federal Reserve on
update
Thursday promised to funnel trillions of
dollars into short-term funding markets — the
third injection in four days — after investors
said US government bond trading had begun
to malfunction in the face of escalating market
volatility.

How is coronavirus taking its toll on

markets, business and our everyday “You are seeing the market function melting
lives and workplaces? Stay briefed down, with no standard correlations between
with our coronavirus newsletter. asset classes,” said Masamichi Adachi, an
Sign up here economist at UBS in Tokyo.

With each day bringing more news on the

virus’s spread, investors were still cautious about dipping their toes back into the
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13/3/2020 (44) Global stock sell-off eases after worst Wall Street rout since 1987 | Financial Times

market, he added. “Nobody wants to hold any positions into the weekend,” said
another trader in the Japanese capital.

On Friday the 10-year US Treasury yield rose 10 basis points to 0.953 per cent. Yields
fall as bond prices rise.

The European Central Bank on Thursday declined to join the Fed and Bank of England
in cutting rates but announced a package of economic support measures.

“Words almost can’t do justice to the carnage we have witnessed in markets over the
past week,” wrote analysts at ANZ on Friday. “The question now is not whether there
will be a downturn, but its duration and severity.”

Elsewhere in Asia, benchmark stock indices fell as much as 10 per cent. In South
Korea, India, Indonesia, Thailand and the Philippines, the falls triggered circuit
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breakers that halted trading temporarily. But many markets walked back losses in
afternoon trading with Thai stocks down just 1 per cent after briefly swinging to a 4 per
cent rise.

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