Share markets turned mixed in Asia on Monday amid conflicting signals on the prospects for a truce in the Sino-U.S. trade dispute, while the Federal Reserve’s newly-found concerns over the global economy constrained the dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan dithered either side of flat through a sluggish session. Chinese blue chips manage to add 0.5 percent, as did Japan’s Nikkei.
But E-Mini futures for the S&P 500 slipped 0.36 percent and spread betters pointed to modest opening losses for the major European bourses.
Wall Street had firmed on Friday after U.S. President Donald Trump said that he may not impose more tariffs on Chinese goods after Beijing sent a list of measures it was willing to take to resolve trade tensions.
The comment stoked speculation of a deal when Trump meets Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina later this month.
However, Sino-U.S. tensions were clearly on display at an APEC meeting in Papua New Guinea over the weekend, where leaders failed to agree on a communique for the first time ever.
U.S. Vice President Mike Pence said in a blunt speech that there would be no end to U.S. tariffs on $250 billion of Chinese goods until China changed its ways.
“The comments from Trump were seen as offering a glimmer of hope that further tariff action could be held in abeyance,” said NAB’s head of FX strategy, Ray Attrill.
“The exchange of barbs between Pence and Chinese President Xi Jinping in PNG on the weekend continues to suggest this is unlikely.”
Covid-19 Pandemic: World Trade To Fall By Up To 32% In 2020 – WTO
World trade is expected to fall by between 13 and 32 percent this year as the covid-19 pandemic disrupts normal economic activity and life around the world.
The World Trade Organization has said in its annual trade statistics and outlook report that that the decline would likely exceed the trade slump brought on by the global financial crisis of 2008.
The report’s estimates of the expected recovery in 2021 are equally uncertain, with outcomes depending largely on the duration of the outbreak and the effectiveness of the policy responses.
WTO director-general, Roberto Azevedo says “the immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies and countries. He recommends policymakers begin planning for the aftermath of the pandemic.
Azevedo said a rapid and vigorous rebound is possible if countries work together rather than if each country acts alone.
Zimbabwe Reintroduces Use Of Foreign Currencies
Zimbabwe has reintroduced the use of foreign currencies for domestic transactions, in the wake of the coronavirus outbreak. The country had banned foreign notes in June last year.
Authorities announced the move on Thursday saying it is expected to help the country access private foreign exchange savings as it gears up for the battle against coronavirus.
The country’s central bank has also reduced its main lending rate to 25% and set a fixed exchange rate as part of measures to support the economy against the pandemic.
Central Bank Governor John Mangudya said he expected banks to cut lending rates to customers.
Zimbabwe had used a number of foreign currencies since hyperinflation forced the government to ditch the Zimbabwe dollar in 2009. Last year’s ban on foreign currencies was intended to restore normalcy to the economy.
Officially, Zimbabwe has so far recorded five cases of coronavirus, including one death.
Hit By Power Shortages, South Africa’s Economy In Recession
South Africa has plunged into recession and widespread power cuts are being blamed for it. Official statistics released on Tuesday shows South Africa’s economy, the continent’s most industrialized, falling into a decline. Its economy shrank by 1.4% in the fourth quarter of 2019 from the previous three-month period.
South Africa’s nationwide power blackouts are blamed for the larger than expected decline in the fourth quarter. State-owned power utility, Eskom, has been unable to meet demand and has had to implement rotating cuts in electricity to residences, factories, mines and businesses.
A recession is commonly defined as two consecutive quarters of economic decline.
South Africa’s economic growth forecast for 2020 has been cut to just under one percent.
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