Asian stock market drops steeply . . .
Amid the COVID-19 pandemic, the U.S. Federal Reserve reduced its benchmark interest rate to 0.25 per cent and launched a massive quantitative easing program in an emergency move on Sunday. Despite the measure from the U.S., however, stocks in Asia have been tumbling. Today, Australian stocks recorded their biggest daily percentage fall on record, with the ASX 200 Index dropping by 9.7 per cent. Mainland China’s Shanghai Composite fell by 3.4 per cent, and Japan’s Nikkei 225 and South Korea’s KOSPI dropped by 2.5 per cent and 3.19 per cent, respectively.
Governments taking drastic measures . . .
Asian central banks have stepped in to soften the blow to their financial markets. The Bank of Japan announced that it will purchase risky assets and start a new lending program with one-year loans to financial institutions at a zero per cent interest rate. The Hong Kong Monetary Authority and the Bank of Korea have reduced their key interest rates to .86 and .75 per cent, respectively. The Central Bank of New Zealand lowered its interest rate to .25 percent and pledged to maintain it for at least 12 months. The Reserve Bank of Australia said that it is ready to inject more money into its financial system.
Canada’s stock market falling as well . . .
Canada’s main stock market plunged on March 12, recording its biggest fall since 1940. The Toronto Stock Exchange’s benchmark S&P/TSX Composite Index plummeted by 12.34 per cent. On the following day, the Bank of Canada cut its benchmark interest rate target to .75 per cent. Today, the Bank of Canada announced that it will expand support for financial institutions, and declared that it is ready to provide support to the Canada Mortgage Bond market.