Asian shares have fallen on growing concerns about US plans for a stimulus package to fight the coronavirus outbreak took the edge off an earlier rally.
Japan’s benchmark Nikkei 225 lost 2%, Hang Seng in Hong Kong was 0.8% higher, and China’s Shanghai Composite was 0.6% lower.
Lale Akoner, Market Strategist at BNY Mellon Investment Management said, “After this week’s largest one-day oil price drop since 1991 Gulf War, today’s improved overall market sentiment has so far led to minor recovery in oil prices. In our view, the short-term marketvolatility aside, the fundamental drivers for both the demand side and supply side imply downward pressure on oil prices until at least the second half of the year.
“This is due to our view that global demand will follow a V-shaped trajectory in 2020. In our view, China, essentially the world’s biggest factory and world’s largest oil importer, will likely encounter a deep economic contraction in Q1 and Q2 (and a strong recovery during the second half of the year) with rest of the world following suit in Q2 (albeit less severe slowdown compared to China, the epicentre of the virus).
“This implies subdued global oil demand until H2 and contraction on a year-over-year basis. On the supply side, it remains to be seen what price level will be able to bring back Russia and Saudi Arabia to the table and put a halt to the price war between the two parties.”