World shares rally, Shanghai up 1.3 per cent, as China boosts market

BANGKOK (AP) – Shares rallied in Asia and Europe yesterday after a recovery on Wall Street and further market-boosting support from China’s central bank.

Germany’s DAX rose one per cent to 13,174.34 while in France the CAC 40 climbed 1.1 per cent to 5,893.98. Britain’s FTSE 100 surged 1.3 per cent to 7,423.93. Wall Street looked set for more gains, with the future contract for the S&P 500 up one per cent to 3,277.70. The Dow future also gained one per cent, to 28,638.00.

In Asian trading, the Shanghai Composite closed 1.3 per cent higher, far from erasing an eight per cent plunge a day earlier as the People’s Bank of China reportedly put another USD57 billion in extra funds into the markets.

Macau announced yesterday that it was asking its establishments to close for two weeks, as another two Chinese cities imposed restrictions to help contain the spread of a virus that has killed more than 400 people and infected more than 20,000.

The communist party newspaper People’s Daily said in a tweet that another CNY400 billion (USD57 billion) in funds went into the markets following the People’s Bank of China’s injection of a net CNY150 billion USD21 billion) on Monday.

Currency traders at the foreign exchange trading room of the KEB Hana Bank headquarters in Seoul, South Korea. PHOTO: AP

The central bank announced in advance that it would put CNY2 trillion (USD173 billion) into the market through reverse repurchases of securities on Monday when the markets reopened after a 10-day break that was prolonged to help reduce risks of further spreading the virus. The lion’s share of that money went to cover maturities falling due.

Chinese leader Xi Jinping has declared the crisis the country’s biggest priority, while tens of millions of people remain in lockdown as a precaution against contagion.

“Extra liquidity courtesy of Chinese central bankers, instructions from authorities ‘not to panic’ and perhaps some state-backed institutional buying seems to have done the trick,” Jasper Lawler of LCG said in a commentary.

“Authorities can’t prop up markets indefinitely but traders for now are taking the cue to buy the dip,” Lawler said.

In other Asian markets, Japan’s Nikkei 225 index gained 0.5 per cent to 23,084.59, while the Kospi in South Korea jumped 1.8 per cent to 2,157.90. Australia’s S&P ASX/200 rose 0.4 per cent to 6,948.70, while the Hang Seng in Hong Kong climbed 1.2 per cent to 26,675.98. The Shanghai Composite jumped 1.3 per cent to 2,783.29. Taiwan’s benchmark surged 1.8 per cent and the Sensex in India gained 2.3 per cent.

Overnight, US stocks had recovered some of their losses from earlier weeks, though a warning signal of recession in the bond market was still flashing red and oil tumbled on worries about weakened demand. The S&P 500 rose 0.7 per cent, to 3,248.92. The Dow Jones Industrial Average picked up 0.5 per cent, to 28,399.81, and the Nasdaq added 1.3 per cent, to 9,273.40.

Markets have been wracked by uncertainty over how much the virus will spread, how many it might kills and how long the outbreak might persist, hurting economies and corporate profits.

Benchmark US crude gained 97 cents to USD51.08 per barrel in electronic trading on the New York Mercantile Exchange. It tumbled USD1.45, or 2.8 per cent, on Monday to settle at USD50.11 per barrel on worries the virus crisis might crush demand. It had been above USD63 toward the start of the year, before the virus outbreak. Brent crude, the international standard, added 57 cents to USD55.02 per barrel. It fell USD2.17, or 3.8 per cent, to settle at USD54.45 per barrel overnight.

In currency trading, the dollar rose to JPY109.09 from JPY108.69. The euro was flat at USD1.1061.