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GLOBAL MARKETS-Asian stocks slip as global recession looms

Thu, 02nd Apr 2020 00:46

* Wall Street closes down more than 4%

* Investors look nervously ahead to earnings

* Oil slides as consumption slows, inventories build

* Dollar, yen gain on safety bid

By Tom Westbrook and Herbert Lash

SYDNEY/NEW YORK, April 2 (Reuters) - Asian equity markets
and crude oil looked set for further losses on Thursday, after a
dire warning about the U.S. coronavirus death toll and mounting
evidence the fast-spreading disease has sent the world economy
hurtling into a deep recession.

Stocks on Wall Street fell more than 4% as the warning of a
potentially massive death toll and growing evidence of a deep
economic downturn reinforced expectations that corporate results
will suffer in the first quarter and then turn sharply lower.

U.S. President Donald Trump said he is considering a plan to
halt flights to coronavirus hot zones in the United States as
his administration struggles to contain a pandemic that is
projected to kill at least 100,000 people.

Flight cancellations to U.S. destinations would hammer an
already reeling airline industry and add to an overall slowdown
in business that will curb corporate earnings.

Nikkei futures rose slightly, but sat about below the
index's cash close. Hong Kong futures were negative.

E-Mini futures for the S&P 500 rose 0.67%.

MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.64% in early trade.

Bank stocks led losses in Australia after New Zealand's
central bank ordered lenders suspend dividends - hitting
Australia's banks since they control nearly all New Zealand's
banking sector.

Michael McCarthy, chief strategist at brokerage CMC Markets
in Sydney, said bad news worldwide was starting to weigh.

"The shift in rhetoric from the White House has hurt some of
the more bullish traders," he said.

MSCI's gauge of stock performance in 47 countries
slid 0.08% after declining almost 4% overnight
in bourses in London, Frankfurt and Paris
.

"The question of whether the U.S. index goes to test the
March lows will be all the talk today," Chris Weston, head of
research at Melbourne brokerage Pepperstone, said in a note.

"Earnings estimates are too high," he said. "And when we're
hearing of companies curbing buybacks, and shelving dividend
plans, then we should expect this to resonate through earnings
downgrades too."

Oil prices fell after U.S. crude inventories rose last week
by the most since 2016, while gasoline demand suffered its
biggest weekly drop ever as the coronavirus shut down businesses
and stay-at-home mandates kept highways bare.

Analysts expect similar data in coming weeks as refineries
curb output further and gasoline demand continues to decline.

U.S. crude inventories rose by 13.8 million
barrels last week, the U.S. Energy Information Administration
said, in the biggest one-week increase since 2016.

West Texas Intermediate (WTI) crude fell 17 cents to
settle at $20.31 a barrel, after sliding to a low of $19.90.

June Brent crude fell $1.61 to settle at $24.74 a
barrel. The global benchmark fell to $21.65 on Monday, its
lowest since 2002, when the now-expired May contract was the
front month.

The dollar gained as investors rushed to safe-havens, such
as gold and government debt.

Coordinated action by central banks to boost dollar supply
has helped calm extreme volatility, analysts said.

The dollar index rose 0.536%. The Japanese yen
weakened 0.09% versus the greenback at 107.28 per dollar.

Spot gold rose 0.12% to $1,592.52 an ounce.

U.S. manufacturing activity contracted less than expected in
March, data showed, but disruptions caused by COVID-19 pushed
new orders received by factories to an 11-year low, reinforcing
economists' views that the economy already was in recession.

Boston Federal Reserve Bank President Eric Rosengren said
social distancing efforts meant to contain the coronavirus
outbreak have "stilled" the U.S. economy and could lead the
unemployment rate to "rise dramatically."

Traders jumped toward the perceived safety of government
bonds on the economic outlook, pushing the yield on the
benchmark 10-year U.S. Treasury note down to 0.6019% from 0.699%
late on Tuesday.

(Reporting by Herbert Lash; additional reporting by Tom
Westbrook in Sydney; Editing by Tom Brown and Sonya Hepinstall)

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