Australian equities the only bright spot in sea of global stocks gloom

“We continue to mark down first-half 2020 global GDP forecasts as our assessment of both the global pandemic’s reach and the damage related to necessary containment policies,” said JPMorgan economist Bruce Kasman.

As a result, central banks have mounted an all-out effort to bolster activity with rate cuts and huge asset-buying campaigns, which have at least eased liquidity strains in markets.

On Monday, China became the latest to add stimulus, with a cut of 20 basis points to a key repo rate, the largest in nearly five years.

Singapore also eased as the city state’s bellwether economy braced for a deep recession while New Zealand’s central bank said it would take corporate debt as collateral for loans.

Rodrigo Catril, a senior forex strategist at NAB, said the main question for markets was whether all the stimulus would be enough to help the global economy withstand the shock.

“To answer this question, one needs to know the magnitude of the containment measures and for how long they will be implemented,” he added.

“This is the big unknown and it suggests markets are likely to remain volatile until this uncertainty is resolved.”

Dollar not yet done

Bond investors looked to be bracing for a long haul, with European government bond yields dipping and those at the very short end of the US. Treasury curve turning negative. Those on 10-year notes dropped a steep 26 basis points last week and were last standing at 0.68%.

That drop has combined with efforts by the Federal Reserve to pump more US dollars into markets, dragging the currency off recent highs.

Against the yen, the dollar was pinned at ¥107.74, well off the recent high of ¥111.71, but its gains against the euro, pound and heavyweight emerging-market currencies suggested it was regaining strength.