Friday saw Asian shares advancing while US benchmark crude plunged below $19 per barrel.
The mixed reaction followed news that China's economy contracted 6.8% in the last quarter from a year earlier as the country battled the coronavirus. It is the worst downturn since 1979 but better than some analysts had feared.
The rollover of the future contract for benchmark U.S. crude oil, from May to June delivery, brought a sharp technical dip in the price, which sank as much as 8.5%.
By mid-afternoon in Bangkok, it was down $1.61 at $18.26 per barrel, it's lowest level since 2002. Brent crude, the international standard, gave up 12 cents to $27.70 per barrel.
Demand for oil has plunged as countries close down industries and halt travel to contain the spread of the coronavirus. An agreement among oil producers on cutting output that was reached earlier this week helped calm recent volatility in the market. But it was not seen as adequate given the glut of oil developing as output outstrips demand and threatens to overwhelm storage capacity.
The economic data released by China on Friday were not as bad as the double-digit declines some analysts had forecast, though the latest numbers suggest the recovery will be a slow one.
"The March data add to broader signs that China's economy is past the worst. But the recovery will probably continue to underwhelm," Julian Evans-Pritchard of Capital Economics said in a commentary. He added that after an initial bounce as factories reopened, "the recovery in activity has since slowed to a crawl."
Still, investors appeared to be focusing on the bright side. U.S. futures pointed to further gains, with the contract for the S&P 500 up 2.9% while the contract for the Dow industrials gained 3.1%.
In early European trading, the CAC 40 in Paris jumped 3.5% to 4,501.03 while Germany's DAX climbed 3.2% to 10,634.46. Britain's FTSE 100 added 2.4% to 5,764.08.
Japan's Nikkei 225 index jumped 3.2% to 19,897.26 as the country awaited an announcement by Prime Minister Shinzo Abe on expanding a national emergency to combat the coronavirus to the entire nation. He earlier only included Tokyo and several other worst affected areas.
Infections have continued to climb, surging past 10,000 if the number sickened on a cruise ship off the coast in February are included, and worries are growing that the nation's health systems won't be able to cope.
The government is planning to sweeten a renewed and expanded request for people to stay home, which is strictly voluntary, with cash payments of 100,000 yen ($930).
In other trading, the Hang Seng in Hong Kong advanced 1.6% to 24,380.00. The Shanghai Composite index gained 0.7% to 2,838.49, while Australia's S&P ASX 200 rose 1.3% to 5,487.50. South Korea's Kospi surged 3.1% to 1,914.53 despite the release of data showing the country lost 195,000 jobs in March from a year earlier, ending a decade-long run in payroll gains.
India's Sensex climbed 1.7% to 31,119.74 after the central bank cut its benchmark interest rate by 25 basis points, to 3.75% from 4%, to help the stalled economy and ease financing troubles amid a nationwide lockdown to fight the pandemic.
"Human spirit is ignited by the resolve to curb the pandemic. It is during our darkest moments that we must focus on the light," said Reserve Bank of India Gov. Shaktikanta Das.
Other markets in Asia also advanced.
Overnight, the S&P 500 rose 0.6% after flipping between small gains and losses following a government report that 5.2 million Americans filed for unemployment benefits last week. That brought the total for the last month to roughly 22 million.
But even in this new stay-at-home, increasingly jobless economy, some businesses are making out as clear winners, and gains for Amazon, health care companies and stocks in other pockets of the market kept the rally on track.
Companies like Dollar General, Walmart and Netflix have seen gains as people stuck at home stock up on stables.
Sentiment was lifted by news of White House guidelines outlining a phased approach to reopening businesses, schools and other areas of life.
Some optimistic investors are focusing on the massive aid for the economy promised by the Federal Reserve and the U.S government. They also point to recent signs that the outbreak may be leveling off in some of the world's hardest-hit areas.
The dueling sentiments have helped the S&P 500 nearly halve its loss since falling from its record high in mid-February. Stocks were down by nearly 34% in late March, but a recent rally has trimmed the loss to roughly 17%.
Treasury yields remain extremely low, though, reflecting pessimism over the economic outlook.
The yield on the 10-year Treasury was at 0.64% after falling to 0.60% on Thursday. Yields fall when bond prices rise, and investors tend to bid up Treasurys when they're worried about the economy.
The U.S. dollar fetched 107.84 Japanese yen, down from 107.92 on Thursday. The euro slipped to $1.0825 from $1.0839.
China’s economy suffered its biggest contraction since possibly the mid-1960s after it told millions of people to stay indoors as measure to fight the coronavirus pandemic.
The world's second-largest economy shrank by 6.8% from a year earlier in the quarter ending in March after factories, offices and shopping malls were closed to contain the outbreak, official data showed Friday. Consumer spending, which supplied 80% of last year's growth, and factory activity were weaker than expected.
China, where the pandemic began in December, is the first major economy to start to recover after the ruling Communist Party declared the virus under control. Factories were allowed to reopen last month, but cinemas and other businesses that employ millions of people still are closed.
There are signs that after an "initial bounce" as controls ended, "the recovery in activity has since slowed to a crawl," said Julian Evans-Pritchard of Capital Economics in a report.
"China is in for a drawn-out recovery," he said.
The last contraction this big was 5.8% in 1967 during the upheavals of the ultra-radical 1965-75 Cultural Revolution, according to Iris Pang of ING.
Forecasters earlier said China might rebound as early as this month. But they say a sharp, "V-shaped" recovery looks increasingly unlikely as negative export, retail sales and other data pile up.
Instead, they expect a gradual crawl back to growth in low single digits in the coming quarters. For the full year, forecasters including UBS, Nomura and Oxford Economics expect little to no growth.
In total, China has reported 4,632 deaths after the total for Wuhan, the city of 11 million people at the center of the outbreak, was revised upward Friday. The mainland has announced 82,367 cases.
Retail sales fell 19% from a year earlier in the first quarter. That improved in March, the final month of the quarter, to a decline of 15.8%. But consumers, jittery about possible job losses, are reluctant to spend despite government efforts to lure them back to shopping malls and auto showrooms.
That is a blow to automakers and other companies that hope China will power the world economy out of its most painful slump since the 1930s.
Job-hunter Ni Hong's challenge highlights the problem. Ni, 32, quit her job in Beijing in January to find a new one, but the virus disrupted those plans. Ni is paying her mortgage out of her savings and avoiding other spending while she looks in a market flooded with newly laid-off workers.
"In the past, there were maybe two or three candidates for a post," Ni said. "Now, I have eight to 10 competitors, so the chance for me to be eliminated is much higher."
That is a political challenge for the ruling party, which bases its claim to power on China's economic success. The party appealed to companies to keep paying employees and avoid layoffs during the shutdown. But an unknown number have failed, adding to public anxiety.
The economy already was squeezed by a tariff war with President Donald Trump over Beijing's technology ambitions and trade surplus. Last year's growth sank to a multi-decade low of 6.1%.
Exports fell 6.6% in March from a year earlier, an improvement over the double-digit plunge in January and February. But forecasters say demand is bound to slump in America and Europe as anti-virus controls keep shoppers at home.
"Lingering consumption weakness and sliding foreign demand will weigh on the upturn," said Louis Kuijs of Oxford Economics in a report.
Growth was stronger than some forecasts that called for a contraction of up to 16% but this is the biggest contraction since market-style reforms started in 1979.
"The numbers were even uglier than most anticipated, which is good!" said Andy Rothman of Matthews Asia in a report. "These ugly numbers indicate that the leadership didn't fudge the data to hide the seriousness of the situation."
Investment in factories, real estate and other fixed assets, the other major growth driver, sank 16.1%.
Auto sales sank 48.4% from a year earlier in March. That was better than February's record 81.7% plunge but is on top of a 2-year-old decline that is squeezing global and Chinese automakers in the industry's biggest global market.
Asian stock markets rose following the announcement, which was in line with investor expectations. By mid-afternoon, Tokyo's benchmark Nikkei 225 index was up 3% and Hong Kong's Hang Seng was 2.4% higher.
The ruling party has yet to announce this year's official growth target. It has been at least 6% in previous years. Beijing looks likely to miss its target of doubling incomes from 2010 levels by this year.
Controls on Beijing, the capital, and some other cities have been tightened to prevent a resurgence of the disease. Most foreigners are barred from entering the country.
Beijing is boosting spending on a "New Infrastructure" Plan that includes next-generation telecom networks, artificial intelligence, electric vehicle charging and data centers. But leaders don't want to pump too much money into the economy with full fledged stimulus for fear of adding to debt or pushing up inflation that is near a seven-year high.
Carrying out that infrastructure investment "will take a much longer time than it would do without social distancing in place," said Pang of ING. "Recovery will be a long road."
The nation's biggest airlines have tentatively agreed to terms for $25 billion in government aid to pay workers and avoid massive layoffs in an industry that has been slammed by the coronavirus pandemic.
The assistance will include a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading airlines.
Ten airlines — including Delta, American, United and Southwest – fell in line after objecting to some of the Treasury Department's demands. Treasury Secretary Steven Mnuchin said Tuesday that the department would work to finalize the deals and hand over the money as quickly as possible. He said talks were continuing with other carriers.
The airlines entered 2020 riding a decade-long hot streak in which together they earned tens of billions of dollars due to strong travel demand. They bought new planes, enriched shareholders, and hired thousands more workers.
That streak came to a crashing end in just a few weeks, as governments restricted travel to slow the spread of the new coronavirus, and people feared contracting the illness on a plane. Air travel ground to a near complete halt. Airlines cut thousands of flights, and those that remain often carry just a few passengers.
With the payroll grants, airlines and their workers got special treatment in last month's $2.2 trillion measure designed to help businesses and workers get through the pandemic, which has hit every sector of the economy.
President Donald Trump — perhaps mindful of criticism that the government was bailing out a previously profitable industry — said the deals will support airline workers and protect taxpayers.
"Our airlines are now in good shape, and they will get over a very tough period of time that was not caused by them," Trump said.
The payroll aid is roughly based on each airline's spending on wages and benefits from April through September 2019.
American Airlines said Treasury approved $5.8 billion for the airline — a $4.1 billion grant and a $1.7 billion low-interest loan. CEO Doug Parker called it "fantastic news," and "we now believe we have the financial resources necessary to help us withstand this crisis."
Delta Air Lines said it reached agreement with Treasury for $5.4 billion — a $3.8 billion grant and a $1.6 billion loan. CEO Ed Bastian said that the aid, along with cutting 80% of its schedule and having 35,000 employees agree to voluntary leave, will let Delta operate a minimal schedule for people who must travel.
Analysts expected United Airlines to also be eligible for more than $5 billion. United said it expected to complete a final deal with Treasury "in the next few days," but gave no figures.
Southwest Airlines said it expects to get $3.2 billion, including more than $2.3 billion in cash and the balance in an unsecured loan.
The airlines had expected to begin receiving federal aid — entirely in cash that didn't have to be repaid — from the government by April 6, the deadline set by Congress. Instead, they found themselves locked in several days of tense negotiations with the Treasury Department, which insisted that only 70% of the aid should be in cash, with the rest in loans that airlines must repay.
In addition, Treasury demanded that to compensate taxpayers, the largest airlines turn over warrants equal to 10% of the loan amounts. They can be exercised at each airline's closing stock price on April 9. The airlines did not want to give up equity, but they had little leverage in negotiations with Treasury — they desperately wanted the aid.
Delta said the government will get warrants for about 1% of its stock, and Southwest put Treasury's warrants at less than 1% of its shares. Others gave no details.
Last month's economic-relief package also includes a separate $25 billion program to provide loans to airlines. Analysts expect fewer airlines to take part because they can tap private credit markets. But American said it plans to seek a $4.75 billion government loan, and Alaska Airlines indicated it too will apply under the separate program.
Even with the federal aid, airlines are likely to emerge slowly and smaller when the pandemic recedes.
"I don't think air travel will snap right back to where it was here this year, maybe it will come back next year," said Southwest CEO Gary Kelly. "If this is a real recession and a bad recession, it could take four or five years."
Shares were mostly lower Monday in Asia while crude prices lost earlier gains that had come after OPEC and other oil producing nations agreed to cut output to reflect the collapse of demand due to the pandemic.
Trading was muted with European trading closed the day after Easter Sunday. U.S. shares were set to drift lower with the future for the Dow industrials slipping 1.4% to 23,277.50. The S&P 500 future fell 1.5% to 2,738.88.
Markets in Hong Kong and Sydney were also closed.
Just hours before markets reopened, OPEC, Russia and other oil producers finalized an unprecedented production cut of nearly 10 million barrels, or a tenth of global supply, seeking to boost crashing prices and end a price war.
U.S. benchmark crude initially jumped more than $1 but then lost some ground, gaining just 6 cents by late afternoon to $22.82 per barrel. It fell $2.33, or 9.3%, to $22.76 per barrel on Thursday, before the Good Friday holiday.
Brent, the international standard for pricing, fell 33 cents to $31.15 per barrel.
The oil producers agreed in a video conference late Sunday to cut 9.7 million barrels a day beginning May 1. Mexico had initially blocked the deal. Iran's oil minister also says several Middle Eastern nations agreed to an additional cut of 2 million barrels a day.
Analysts said the cuts were not enough to make up for the void in demand due to business and travel shutdowns due to the coronavirus. But the deal at least helped resolve a price war that took U.S. crude to near $20 per barrel, pummeling U.S. oil and gas producers.
"With a demand shock estimated at between 15 to 30 million barrels of oil a day, depending on who you talk to, it is clear that the OPEC+ agreement contains more hope than reality," Jeffrey Halley of Oanda said in a commentary.
"The entire construction is underwhelming, to say the least, and really relies on production collapsing in the U.S. and Canada to deliver the level of cuts required."
In share trading, Japan's Nikkei 225 index lost 2.3% to 19,043.40, while the Shanghai Composite index gave up 0.5% to 2,783.05. The Kospi in South Korea shed 1.9% to 1,825.76. India's Sensex slipped 1.6% to 30,654.61.
"With much of the world still on holiday, this will be a quiet start to the week," said Robert Carnell, regional head of research in Asia at ING. "Increasingly, thoughts will turn to the process of deconfinement, something that we expect will be very slow and phased."
Wall Street closed out its best week in 45 years on Thursday, thanks to unprecedented efforts by the Federal Reserve to support the economy through the coronavirus crisis.
Investors and analysts are looking ahead, trying to gauge when shutdowns in many countries might ease now that the number of deaths and new cases is falling or leveling off in some of the hardest-hit regions,
Comments by Dr. Anthony Fauci, the top infectious disease expert in the U.S., have raised hopes. He has said some parts of the U.S. might be able to reopen as early as next month, while warning that much remains uncertain.
China has begun, cautiously, to reopen activity in regions such as Wuhan and surrounding Hubei province that were shut down during the worst of its outbreak.
However, in Asia some governments are just now tightening restrictions to try to curb surges in the number of newly confirmed coronavirus infections. In Japan, Prime Minister Shinzo Abe is facing criticism from some who fear the government has done too little, too late.
This week will bring a slew of first quarter corporate earnings that are likely give an inkling of how badly the pandemic is battering business, though much of the damage has come since the end of March. China is due to report its first quarter GDP data on Friday.
CURRENCIES: The dollar fell to 108.02 Japanese yen from 108.21 yen on Friday. The euro slipped to $1.0933 from $1.0940.
Toyota Chief Executive Akio Toyoda promised Friday that the Japanese auto industry would seek to protect jobs worldwide as it endures the coronavirus pandemic.
Toyoda, speaking as head of the Japan Automobile Manufacturers Association, said he was worried the Japanese economy might be destroyed before the world can win the fight against the sickness caused by COVID-19.
"If our hospitals get overloaded to the point of devastation, then Japan may never be able to recover," Toyoda said on an online news conference.
The group that brings together Japanese automakers, including Nissan Motor Co. and Honda Motor Co., and also parts makers, will set up a special fund to help those laid off find jobs, Toyoda said.
Toyoda said the biggest threat to the industry is the potential loss of skilled workers with their manufacturing and engineering finesse.
After World War II, Toyota made pots and pans and grew potatoes on farms, Toyoda said, emphasizing automakers' determination to make practically anything to protect jobs and survive.
Like its counterparts in the U.S., Toyota has begun making face masks, although they were too wrinkly to be sold and will instead be used at Toyota facilities to reduce demand elsewhere, Toyoda said.
Japan declared a state of emergency this week as cases have continued to surge, especially in Tokyo and other urban areas. Japan has about 5,500 coronavirus cases, but the fear is that there may be an exponential jump. The world has 1.6 million confirmed cases, with more than 466,000 in the U.S.
Toyoda said 3,000 rooms now being used to quarantine auto workers returning from abroad, could, if needed, be used for other people.
He compared the current uncertainty and the need to stay home to enduring a long winter. Some assembly plants have halted production because cars aren't selling.
"We are now feeling more than ever that being able to go wherever you want is a truly moving experience," Toyoda said.
"We must survive. Or else there can be no spring."