Mainland China equity market finished session higher on Tuesday, 24 March 2020, joining regional rally, after the U. S. Federal Reserve rolled out a slew of support measures to ease a global cash crunch, although gains were capped due to a sharp rise in new coronavirus cases in China. At closing bell, the benchmark Shanghai Composite Index rebounded 2.34%, or 62.27 points, to 2,722.44. The Shenzhen Composite Index, which tracks stocks on China's second exchange, advanced 2.1%, or 34.35 points, to 1,666.22. The blue-chip CSI300 index added 2.7%, or 94.80 points, to 3,625.11.
Investors were encouraged after the U.
S. Federal Reserve announced an open-ended asset purchase program on Monday, while Germany is set to unveil major stimulus measures as the death toll from the virus rises throughout Europe.
The Fed announced unlimited quantitative easing and programmes to support credit markets on Monday in a drastic bid to backstop an economy reeling from emergency restrictions on commerce. The Fed said it would purchase Treasurys and mortgage-backed securities in the amounts needed to support smooth market functioning, showing the central bank is willing to go far beyond the $700 billion in new purchases announced last week. The region was also up on hopes that US lawmakers will bridge their differences and pass a US$1.8 trillion economic support package.
Mainland China reported a doubling in new virus cases, driven by a jump in infected travellers returning home from overseas, raising the risk of transmissions in Chinese cities and provinces that had seen no new infections in recent days.
China cannot afford to let its guard down when it comes to combating the coronavirus, with the country still at risk from sporadic infections as well as those from overseas, a health official said on Tuesday.
The economy suffered through an eye-popping first quarter as the epidemic hammered business activity, with deterioration even as firms were supposed to be going back to work, a private survey showed.
After surveying thousands of Chinese firms, China Beige Book International suggested that a 10-11% GDP contraction in the first quarter is not unreasonable.
CURRENCY NEWS: China's yuan declined against the dollar on Monday, in spite of China central bank fixed stronger mid-point rate, due to the economic impact of the coronavirus pandemic. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0999 per dollar, 59 pips or 0.08% weaker than the previous fix of 7.094. In the spot market, onshore yuan CNY=CFXS opened at 7.0747 per dollar and was changing hands at 7.0841 at midday, 59 pips stronger than the previous late session close.
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