Tuesday’s continued bounce comes after a Reuters report said China’s central bank could cut its key lending rate as well as banks’ reserve requirement ratios (RRRs) in the coming weeks to support economic growth. The report came a day after the People’s Bank of China unveiled liquidity injection measures to the tune of more than 1 trillion yuan. The PBOC also injected another 400 billion yuan in liquidity. The Dow is now up 500 points this morning, Chinese stocks jumped sharply overnight after a massive slump on Monday. The Shanghai Composite closed 1.3% higher while the Shenzhen A Shares index gained 1.8%. Other equity indexes in the region, including Hong Kong’s Hang Seng and the Korean Kospi, also posted strong gains. That positive sentiment spilled over into European equity markets. The Stoxx 600 index gained 1.6%. Meanwhile, the German Dax climbed 1.6% along with the French CAC 40.
Even with the higher death toll, economists and government officials believe the overall economic impact will be minimal. Atlanta Federal Reserve Bank President Raphael Bostic on Monday said his outlook for the U.S. economy was unmoved by the virus. White House economic advisor Larry Kudlow also doesn’t think the outbreak is not a “disaster for the U.S. economy.
The Canadian dollar is better top the USD on the back of these events, while oil prices have moved back into positive territory, West Texas Intermediate is now over $50 USD a barrel.
Expect continued volatility.