Asia shares given pause as IMF warns of severe global recession

SYDNEY (REUTERS) - Asian shares paused at one-month highs on Wednesday (April 15) as warnings of the worst global recession since the 1930s underlined the economic damage already done even as some countries tried to re-open for business.

Japan's Nikkei eased 0.5 per cent, though that followed a 3 per cent jump the previous session. South Korea stocks led gains among the region's major markets, with the Kospi surging 1.7 per cent while Hong Kong shares also saw gains with the Hang Seng up 0.2 per cent.

Singapore's Straits Times Index edged up 0.2 per cent as of 9:46am local time.

Australia's S&P/ASX 200 was down 1.1 per cent while the Shanghai Composite Index was trading 0.2 per cent lower.

Likewise, E-Mini futures for the S&P 500 dipped 0.6 per cent, following a 3 per cent rise in New York hours.

"Flattening infection curves and the thoughts of more stimulus have lifted all boats," said Stephen Innes, chief global market strategist at AxiCorp.

"However, appearances can be deceiving as behind the headlines lie the most gnarly storm clouds building, suggesting there is still much to be worried about."

Even as some US states considered relaxing restrictions, the country's death toll rose by at least 2,228, a single-day record, according to a Reuters tally.

US President Donald Trump responded by saying some states could still open shortly or even immediately. He also temporarily halted funding to the World Health Organization, saying it should have done more to head off the pandemic.

Much economic damage has already been done, with the IMF predicting the world this year would suffer its steepest downturn since the Great Depression of the 1930s.

Bruce Kasman, chief economist at JPMorgan, warned such a slowdown would take a heavy toll on corporate earnings.

"We project global profits to experience a roughly 70 per cent peak-to-trough decline in 2020," he wrote in a note.

"Even with a projected strong subsequent rebound, global profits are expected to stand 20 per cent below their forecasted pre-pandemic level at the end of next year."

Shares of JPMorgan Chase and Wells Fargo & Co both fell on Tuesday as the banks set aside billions of dollars to cover potential loan losses from the pandemic.

Bond markets are still wagering on tough times ahead, along with unlimited support from central banks and a disinflationary pulse from lower energy prices.

Yields on US 10-year Treasuries have settled around 0.74 per cent, more than 100 basis points below where they started the year.

That drop in yields combined with the vast amounts of cash being created by the Federal Reserve has been a drag on the US dollar in recent sessions.

Currencies leveraged to global growth, including the Australian and New Zealand dollars, have led the way higher though the dollar has also lost ground to its major peers.

Early Wednesday, the dollar was down at 107.15 yen having shed 0.5 per cent overnight, while the euro firmed to US$1.0985 . The dollar index was at its lowest in two weeks at 98.620.

The dollar pullback and a tide of cheap money from central banks has burnished gold prices, with the metal hitting its highest since late 2012. It was last at US$1,727 an ounce.

In energy markets, oil was again picking up the pieces after tumbling on Tuesday as investors doubted a record global output cut could offset the loss of demand as the economy stalls.

US crude was last up 48 cents at US$20.59, having shed 10 per cent on Tuesday, while Brent crude edged up 39 cents to US$29.99 in erratic trade.