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GLOBAL MARKETS-Asian stocks, oil sell off on second wave fears



* Asian stock markets :

SYDNEY, June 15 (Reuters) – Asian markets started the week on the backfoot on Monday while oil prices slipped as fears of a second wave of coronavirus infections in China sent investors scurrying for safe-havens.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.25% with Australian shares off 0.4% and South Korea slipping 0.6%. Japan’s Nikkei fell 0.75%.

The losses follow a strong rally in global equities since late March, fuelled by central bank and fiscal stimulus and optimism as countries gradually lifted restrictions put in place to curb the spread of the novel coronavirus.

However, risk sentiment took a knock after Beijing recorded dozens of new COVID-19 cases in recent days, all linked to a major wholesale food market.

Investors are also fretting over a spike in cases in the United States.

Another large coronavirus outbreak could roil financial markets, which had been rallying recently on hopes for economic recovery.

Some analysts were still hopeful Monday’s sell-off will be temporary.

“We assume that any second wave is likely to be more manageable than the first given earlier policy experience,” analysts at Morgan Stanley wrote in a note.

“Policy easing will also help Asia (excluding Japan) get back on its feet better.”

The Chinese yuan dipped in offshore trade to 7.0877 per dollar while the risk-sensitive currencies of Australia and New Zealand were also sold off. Both were last down 0.4% at $0.6855 and $0.6424, respectively.

Investors are keeping a close eye on Chinese industrial production and retail sales figures due later in the day for signs of recovery in the world’s second-largest economy.

Elsewhere, the dollar was little changed at 107.46 yen as investors avoided big moves before a Bank of Japan policy meeting ending Tuesday.

No major changes are expected, but some investors may be interested in Governor Haruhiko Kuroda’s views on its yield curve control policy.

U.S. central bankers have discussed the option of adopting yield curve control to cap bond yields.

Analysts said further tests awaited global markets this week – in particular whether re-opening hopes could still push equities higher.

Federal Reserve Chairman Jerome Powell is due to testify before Congress where “he may try to spin a more upbeat/hopeful outlook – but whether markets listen remains to be seen,” said Betashares chief economist David Bassanese.

Also of interest is U.S. May retail sales figures on Tuesday, which are expected to bounce smartly after a slump in April.

“If the market can’t rally on retail sales it will be a strong signal that the initial ‘re-opening bounce’ has finally been priced,” Bassanese added.

“If so, that means going forward economic data – which will provide guideposts on the actual shape of the recovery – will start to matter again.”

In commodities, oil prices slipped with Brent down 2% at $37.95 a barrel while U.S. crude fell 2.7% at $35.26. Gold rose 0.2% to $1,732.2 an ounce on safe haven demand.

Editing by Sam Holmes


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Coronavirus: Chinese economy bounces back into growth – BBC News



China’s economy grew 3.2% in the second quarter following a record slump.

The world’s second biggest economy saw a sharp decline in the first three months of the year during coronavirus lockdowns.

But figures released on Wednesday show China’s Gross Domestic Product (GDP) returned to growth during April to June.

The numbers are being closely watched around the world as China restarts its economy.

The figure is higher than experts were predicting and points towards a V-shaped recovery – that is, a sharp fall followed by a quick recovery.

It also means China avoids going into a technical recession – signified as two consecutive periods of negative growth.

The bounce-back follows a steep 6.8% slump in the first quarter of the year, which was the biggest contraction since quarterly GDP records began.

The country’s factories and businesses were shutdown for most of this period as China introduced strict measures to curb the spread of the virus

The government has been rolling out a raft of measures to help boost the economy, including tax breaks.

Is this a V-shaped recovery?

Analysis by Mariko Oi, BBC News, Singapore

The Chinese economy managed to grow stronger than expected as the economy emerged from the lockdown.

All the stimulus measures announced by the authorities seem to be working – with factories getting busier, evident in growth in the industrial production data.

But one sector that hasn’t recovered as quickly as they had hoped is retail sales.

They still fell in the second quarter – and getting people spending again will remain a challenge.

And just as the economy starts to recover, tensions with the US are flaring up – especially over Hong Kong.

That is why some economists are reluctant to call it a V-shaped recovery just yet.

A research note from Deutsche Bank said the “V-shaped recovery” was “largely completed”.

“Consumer spending is still below its pre-Covid path, but the remaining gap is largely concentrated in a few sectors – travel, dining, leisure services– where rapid recovery is unlikely,” it added.

In May, China announced it would not set an economic growth goal for 2020 as it dealt with the fallout from the coronavirus pandemic.

It is the first time Beijing has not had a gross domestic product (GDP) target since 1990 when records began.

For the first six months of the year, China’s economy fell 1.6%, its National Bureau of Statistics said.

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21 more cases of COVID-19 reported in B.C. – CTV News VI



Another 21 cases of COVID-19 have been confirmed in British Columbia, health officials announced Wednesday.

The total includes 19 new positive tests for the coronavirus and two additional epidemiologically linked cases, bringing the total number of confirmed cases in B.C. since the pandemic began to 3,149.

There have been no additional deaths from the virus over the last 24 hours, leaving the provincial death toll at 189.

There have now been 2,753 recoveries from the virus in B.C., leaving the province with 207 active cases. Of those, 14 people are hospitalized and five are in intensive care.

Wednesday’s update from provincial health officer Dr. Bonnie Henry and Health Minister Adrian Dix came in the form of a news release. It comes after a surge in new positive tests reported over the weekend, many of them related to private parties in the province’s Interior.

The 21 additional cases announced make Wednesday the sixth day out of the last seven in which the provincial case count grew by at least 20. Tuesday, when 13 new cases were reported, was the only day in the last week not to cross that threshold.

Dix and Henry addressed these increases in their joint statement Wednesday.

“We are concerned about the increase in new cases in recent days as COVID-19 continues to silently circulate in our communities,” the pair said. “As we spend more time with others, we need to find our balance with COVID-19. We need to minimize the number of cases, manage new cases as they emerge and modify our activities accordingly.”

The officials noted that many of B.C.’s early cases of the coronavirus were found in long-term care and assisted-living facilities, the recent growth in the provincial caseload has happened mostly in the broader community.

There continue to be three ongoing outbreaks of COVID-19 in health-care facilities, including two in seniors’ care homes and one in an acute care unit. There is also one ongoing “community outbreak,” according to Dix and Henry.

Most cases of COVID-19 in B.C. have been located in the Lower Mainland, with 1,659 in the Fraser Health region and 1,023 in the Vancouver Coastal Health Region.

Elsewhere in the province, there have been 216 cases in Interior Health, 135 in Island Health and 65 in Northern Health.

An additional 51 cases of COVID-19 reported in B.C. have been found in people who reside outside Canada, according to Wednesday’s update.

Henry and Dix will deliver their next live briefing on Thursday.

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'A long climb back': Macklem stresses recovery as BoC holds – BNN



Bank of Canada Governor Tiff Macklem sent a clear message with Wednesday’s Monetary Policy Report: Economic recovery from the COVID-19 pandemic is the central bank’s top priority.

“The recovery has started, and we’re seeing some good numbers, but it’s going to be a long climb back,” Macklem told BNN Bloomberg in an interview Wednesday, just hours after the Bank of Canada held its benchmark interest rate at 0.25 per cent and made it clear it’s in no rush to move off that level.

“Considerable policy support is going to be required. Fiscal policy is taking a lead, but monetary policy has an important complementary role to play, and we wanted to be clear to Canadians that the Bank of Canada is going to be there through the full length of the long climb back.”

He also said that the central bank is prepared to add more stimulus, if required, a policy he says was made clear in the Bank of Canada’s central scenario issued with Wednesday’s MPR.

“The purpose of putting out a central scenario is that — even though there is considerable uncertainty around it — it is the scenario that guided us in our policy deliberation,” he said.

“As data comes in we’ll be evaluating that relative to that central scenario. If we need more monetary stimulus, we’ll do that.”

Macklem highlighted Canadians’ high level of household indebtedness as a longstanding concern for the Bank of Canada, but expressed confidence that economic recovery could prove to be a rising tide.

“The best predictor of whether somebody is going to pay their mortgage is whether they have a job,” Macklem said. “Yes, high household indebtedness is a vulnerability, but supporting the recovery and reducing that vulnerability are entirely aligned.”

“By holding interest rates low across the yield curve, that will reduce debt burdens for Canadians.”

While Macklem said the central bank “didn’t put [its] forward guidance on a calendar,” its central scenario indicates that the key interest rate will remain where it is for at least two years.

“There’s a lot of uncertainty around that scenario, but I think the message is pretty clear,” he said. “Interest rates are going to be very low for a long time.”

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