Asia Stocks See a Slight Swerve as IMF Warns of Further Contraction for 2020 Economy

Asia Stocks See a Slight Swerve as IMF Warns of Further Contraction for 2020 Economy.

Stocks in Asia saw little changes, but mostly lower, in the morning session on June 17, 2020, after a huge rebound yesterday over Fed’s stimulus plan, while Dow Jones closed in positive territory.

 

As of 9:20 local time in Thailand (GMT+7), Nikkei slipped 0.76%, SSEC dipped 0.06%, HSI gained 0.05%, ASX 200 shedded 0.03% and Kospi dropped 0.17%.

Overnight, Dow Jones closed at 26,289.98 points, increased 526.82 points or 2.04%. S&P 500 hiked 1.90% and Nasdaq rose 1.75%.

Late Monday, the Fed announced the Secondary Market Corporate Credit Facility measure, which allows the purchasing Corporate Bond to buy private companies’ debentures and bonds as well as in the secondary market.

 

However, the International Monetary Fund (IMF) on Tuesday warned that the global economy is on track for a more significant contraction than its’ forecast in April.

“For the first time since the Great Depression, both advanced and emerging market economies will be in recession in 2020. The forthcoming June World Economic Outlook Update is likely to show negative growth rates even worse than previously estimated,” wrote IMF’s chief economist Gita Gopinath.

In April, the IMF forecasted a 3% contraction in the global economy in 2020, but the view changed, despite the reopening economy.

 

Finansia Syrus Securities (FSS) expected SET Index to swing sideways between 1,355-1,380 points as the market still had a positive view on faster-than-expected recovery in the economy after the U.S. retail sales for May rose 17.7% M-M, which was better than expected. Meanwhile, the U.S. President Donald Trump also planned to invest US$1 trillion in infrastructure. FSS stated that the negativity in the market bottomed out in May, but the recovery to prior-crisis level would take time and still has a lot of risks.

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