Asian Shares Down as Investors Brace for More Signs of Economic Damage

The major Asia-Pacific stock indexes are trading lower on Monday as traders digest the OPEC+ production cut deal and the latest news about the coronavirus pandemic. Volume is light with most of the world coming off a long holiday weekend. Markets in Hong Kong and Australia are also closed for Easter Monday.

At 03:44 GMT, Japan’s Nikkei 225 Index is trading 19349.74, down 148.76 or -0.76%. In South Korea, the KOSPI Index is at 1848.70, down 12.00 or -0.64% and in China, the Shanghai Index is at 2787.28, down 9.36 or -0.33%.

Equities Unable to Shake Pandemic Fears

Asian shares fell on Monday as investors braced for more signs of economic damage from the coronavirus pandemic although a landmark deal by OPEC+ to slash output could help to soften the blow.

Last week’s stimulus efforts from the Federal Reserve may have dampened fears of a financial crisis for now, however, the economy is far from returning to normalcy. Additionally, while the panic selling we saw in March may be fading, not many investors may want to chase stock prices higher at current price levels and given that we are likely to see more evidence of economic weakness over the short-run.

New Worries for Japan

Reuters is reporting that Japan may have to ramp up its measures to tackle COVID-19 after cases have been found in some parts of the country with no known links to other outbreaks, the World Health Organization said on Friday.

“Japan has seen cases of COVID in three prefectures including Tokyo that are not linked to know chains of transmission,” Michael Ryan, executive director of the WHO Health Emergencies Programme told a press conference. “That is not good, but they are looking.”

“The data I see this morning reassures me they are very aggressively following this,” he said, but Japan may have to scale up measures in some prefectures, he added.

Oil Prices Surge

Oil prices jumped in early Asian activity after OPEC and its allies finalized an agreement to cut production by 9.7 million barrels per day, the single largest output cut in history. The move is likely to unpin stocks and create a floor for oil prices, but traders don’t believe the cuts are enough to change the trend in oil, given the current demand destruction caused by the coronavirus pandemic.

Other News – US Earnings Week Begins, Major Chinese Data Releases

Also in focus this week, U.S. companies announce their earnings, starting with big banks, while China releases its trade data on Tuesday and closely watched gross domestic product data on Friday.

Companies are only now adjusting their behavior to deal with an expected global recession, which the International Monetary Fund (IMF) has said will be “way worse” than the global financial crisis a decade ago.