HYDERABAD: Calm returned to markets on Tuesday helped by a coordinated policy response by multiple governments and central bankers. Helpfully, oil prices too surged 10 per cent after shocking the world with the biggest rout in 30 years when prices crashed to USD 30 per barrel on Monday.
Indian markets were closed on account of Holi on Tuesday. US President Donald Trump vowed to take major steps including a payroll tax cut and other financial relief to guard the economy against the impact of coronavirus outbreak, which effectively calmed investors' nerves.
On Tuesday, US stock indexes opened USD 2 higher as China reported a slowdown in coronavirus cases. The Dow Jones Industrial Average rose 601.98 points at the open to 24,453.00 and the S&P 500 opened higher by 66.92 points at 2,813.48.
The sentiment in Asian markets was similar. Japan’s Prime Minister Shinzo Abe promised to spend over USD 4 billion (a second package) to cope with the virus outbreak and further promised to engage its central bank to support the economy.
Predictably, benchmark index Nikkei 225, though opened 3 per cent lower than its previous close, surged over 1 per cent following Abe’s commitment. Similarly, the Hong Kong’s Hang Seng rose 1.4 per cent, covering a 4 per cent loss seen on Monday.
European markets too gained ground with London’s FTSE 100 share index rising 3 per cent on Tuesday. Among the European nations, Italy is the worst hit. On its part, the Italian government suspended mortgage repayments to help households as part of an economic relief package.
The European Central Bank too is expected to pitch in reducing policy rates taking them deeper into the negative territory, besides extending more long-term loans to banks and increasing its purchases corporate bonds and others.
Markets saw a bloodbath on Monday following the oil price bomb, but brent crude took no time to cover the lost ground. On Tuesday, brent crude futures were up USD 3.36, nearly 10 per cent to USD 37.72 per barrel, while West Texas Intermediate (WTI) crude also gained around 10 per cent to USD 34.27 a barrel.
Trump pushes payroll tax relief
In a bid to calm the fears of financial markets over the impact of the coronavirus epidemic, US President Donald Trump has said he will press Congress to pass payroll tax relief and other quick measures