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05.02.2020

Stocks rout stemmed as China injects $71bn into banks

Stock prices rebounded around the world on Tuesday, as China’s central bank moved to prop up its banking system in the face of the coronavirus outbreak.

The People’s Bank of China on Tuesday said it had injected 500bn renminbi ($71.5bn, £55bn) into China’s banking system to support liquidity “during the period of epidemic prevention and control.” The injection follows a $172bn stimulus package on Monday, aimed at supporting the country during the deadly coronavirus outbreak.

The S&P 500 rose 2.3%, while the Nasdaq Composite gained 1.9% and the Dow Jones Industrial Average 1.6%.

Despite the efforts from China, Goldman Sachs estimated that the global gross domestic product growth this year could fall by 0.1-to-0.2% even if infections slows significantly in February and March.

"The near-term impact is quite large," Goldman’s chief economist Jan Hatzius said. "What happens to 2020 as a whole really depends on how quickly the episode is brought under control."

Source: Reuters.
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