Markets mixed as Japan faces recession while China gets monetary support

Markets were mixed on Monday.

The STOXX Europe 600 rose 0.3 percent and the Shanghai Composite surged 2.2 percent but the Nikkei 225 fell 0.6 percent. The US stock market was closed for a holiday.

Japanese stocks fell after the government announced that the economy contracted at a 6.3 percent annualised rate in the last quarter.

ING said in a report that Japanese consumer spending “slumped following the tax hike in the fourth quarter of 2019” and “will now struggle to do anything except contract further in the first quarter as the impact of Covid-19 weighs on consumer sentiment”.

ING added that “further government spending ... will not stop what started off as a technical downturn from evolving into a full-blown recession”.

The death toll in China from the COVID-19 epidemic jumped to 1,868 on Tuesday after 98 more people died but on Monday, Chinese stocks gained from news that the People’s Bank of China is cutting its one-year medium-term lending rate from 3.25 percent to 3.15 percent as well as injecting liquidity through securities purchases.