U.S. masses planes at Japan base to show foes and allies it can handle coronavirus

TOKYO (Reuters) – U.S. Air Force transport aircraft on Thursday massed at Washington’s key Asian military air transportation hub, Yokota Air Base in Japan, to show potential foes and allies it was ready for action despite the coronavirus emergency.

“It shows both our adversaries as well as our allies in Japan the importance of our placement, the importance of our ability to execute our mission,” base Vice Commander, Colonel Jason Mills, said.

U.S. forces are stationed in Japan to defend Washington’s key Asian ally from attack from North Korea, but also to check China’s growing influence in the wider region, including Southeast Asia and the South Pacific.

As Washington tries to tackle the coronavirus pandemic, some officials worry outbreaks in the military may provide fodder for Beijing to question U.S. strength in the region.

“When you’re dealing with COVID-19 induced domestic chaos, you just can’t pay as much attention to foreign affairs,” said Grant Newsham, a research fellow at the Japan Forum for Strategic Studies and a former U.S. Marine colonel who liaised with Japan’s Self Defense Forces.

In April, the U.S. aircraft carrier Theodore Roosevelt was forced to dock in Guam after a coronavirus outbreak infected several hundred sailors. Carriers such as the Ronald Reagan that is forward deployed in Japan and others that regularly pass through Asian waters are among the most conspicuous symbols of U.S. military might.

Yokota has had to quarantine sailors passing through the base who have tested positive for the virus.

Yokota’s air wing, including C-130 transport planes and helicopters, moves troops and equipment around the Asia Pacific. Like other bases in Japan, which hosts the largest concentration of U.S. military personnel outside the United States, it has declared a public health emergency.

Troops at the base in western Tokyo are under orders to keep a distance from each other and local people and wear face masks. Commanders have also split personnel into shifts to lessen contact.

The coronavirus, like the rain that reduced visibility on Thursday, was another issue for air and ground crews to deal with to keep their aircraft flying, said Mills.

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Japan to lift emergency state for Osaka, Kyoto, Hyogo: economy minister

TOKYO (Reuters) – Japan will lift its state of emergency in Osaka, Kyoto and Hyogo on Thursday as the number of new coronavirus infections drops, Economy Minister Yasutoshi Nishimura said on Thursday, with the country eager to revive its battered economy.

Tokyo and four other prefectures, including the northern island of Hokkaido, would remain under the state of emergency – which has already been lifted for much of the country.

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In Japan, world's longest-running TV cartoon show switches to re-runs as coronavirus halts production

TOKYO (Reuters) – Millions of Japanese viewers of the world’s longest-running animated cartoon TV show will have to make do with re-runs from next week after the coronavirus pandemic disrupted production, Fuji Television Network said on Sunday.

Aired every Sunday since 1969, the “Sazae-san” show features the everyday ups and downs of suburban Japanese housewife Sazae and her extended family, is a household name for many generations. It can still attract around 10% of the viewing audience, according to some estimates, for its 30-minute slot at 6.30 p.m. on Sundays. (Japanese website http://www.sazaesan.jp)

The show, adapted from four-frame comic strips by late author Machiko Hasegawa, was acknowledged by Guinness World Records in 2013 as the longest-running animated series, a title that had previously been attributed by the record-keeping organisation to U.S. show “The Simpsons”.

A spokeswoman for Fuji TV, a unit of Fuji Media Holdings Inc (4676.T), said re-runs will begin next week for the first time since February 1975, when the global economy was massively disrupted by an oil price crisis.

While the number of confirmed coronavirus cases and deaths has been low in Japan by some international comparisons, the Japanese economy – the world’s third-largest – has been seriously hit by the global repercussions of the pandemic and is expected to have sunk into a recession in the second quarter of the year.

Earlier this month the government extended the country’s state of emergency to the end of May as part of efforts to stem the spread of the virus, prolonging shutdowns for many businesses.

On Saturday, long-running manga publication Big Comic said its ruthless hitman series “Golgo 13” would take the first hiatus in its 52-year history as social restrictions to contain the virus have made it difficult to produce the hand-drawn cartoon.

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Stocks fall as U.S.-China tensions threaten rebound

NEW YORK/LONDON (Reuters) – Global stock markets fell on Monday on concerns U.S.-Chinese bickering over the origin of the coronavirus outbreak will ignite a new trade war, speculation that strengthened the dollar and drove gold prices higher.

The rise in risk aversion came as business surveys showed Asian and European factory activity in April fell deeper into contraction, adding to a dismal outlook as government lockdowns to contain the pandemic froze global production and slashed demand.

U.S. Secretary of State Mike Pompeo on Sunday said there was “a significant amount of evidence” that the coronavirus emerged from a Chinese laboratory, remarks that rattled investors though he did not dispute U.S. intelligence agencies’ conclusion that it was not manmade.

An editorial in China’s Global Times said he was “bluffing” and called on the United States to present its evidence.

“This morning’s session is being dominated by risk-averse trading as investors weigh the negative consequences to global growth from another escalation in U.S.-China tensions,” said Simon Harvey, currency analyst at broker Monex Europe.

“The headlines of further tariffs and supply-chain disruptions come at a time where global growth expectations are already fragile,” he said.

IHS Markit’s final manufacturing PMI for the euro zone sank to 33.4, its lowest since the survey began in mid-1997 and far below the 50-point line dividing growth from contraction.

A gauge from the United States published on Friday showed manufacturing activity plunged to an 11-year low in April.

The pan-European STOXX 600 index lost 2.26% while MSCI’s gauge of stocks across the globe shed 1.12%.

On Wall Street, The Dow Jones Industrial Average fell 195.57 points, or 0.82%, to 23,528.12. The S&P 500 lost 12.58 points, or 0.44%, to 2,818.13 and the Nasdaq Composite added 27.74 points, or 0.32%, to 8,632.69.

Volatility gauges for European and American blue-chip stocks shot up to a two-week high.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.5%, pulled down by the Hang Seng in Hong Kong.

The dollar rose against most major currencies. The dollar index rose 0.163%, with the euro down 0.51% to $1.0927.

The Japanese yen strengthened 0.09% versus the greenback at 106.90 per dollar.

Gold prices also rose as investors sought safety. Spot gold added 0.5% to $1,707.26 an ounce.

Simon Black, head of investment management at wealth management firm Dolfin said investors were also adjusting their forecasts for the depth of the economic damage the pandemic will inflict.

“It’s also the economic reality sinking in,” he said, adding that a rebound by global equities of over 20% from lows hit in March was not likely to be sustainable.

GRAPHIC: Rebound – here

Global coronavirus cases have surpassed 3.5 million and deaths have neared a quarter of a million, according to a Reuters tally.

U.S. crude recently rose 2.33% to $20.24 per barrel and Brent was at $26.76, up 1.21% on the day.

Benchmark 10-year notes last fell 1/32 in price to yield 0.6415%.

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Japan exports slump in March as coronavirus hits US, Chinese demand

TOKYO (REUTERS) – Japan’s exports slumped the most in nearly four years in March as US-bound shipments, including cars, fell at the fastest rate since 2011, highlighting the damage the coronavirus pandemic is inflicting on global demand and trade.

Monday’s bleak data underscored the challenges Prime Minister Shinzo Abe’s government faces in dealing with a collapse in activity that is expected to send the global economy into its deepest slump since the Great Depression of the 1930s.

After a jump in virus cases, Abe expanded a state of emergency last week to include the entire country, which gave authorities more power to push people to stay home and businesses to close. Japan has reported more than 9,000 infections and about 200 deaths.

Adding to worries the world’s third-largest economy is sliding into recession, Ministry of Finance data showed Japanese exports fell 11.7 per cent in the year to March, compared with a 10.1 per cent decrease expected by economists in a Reuters poll. That followed a 1 per cent fall in February and marked the biggest decline since July 2016.

Imports fell 5.0 per cent in the year to March, versus the median estimate for a 9.8 per cent decline, after the prior month’s 13.9 per cent drop, bringing the trade balance to a surplus of 4.9 billion yen ($45.47 million).

By region, exports to China, Japan’s largest trading partner, fell 8.7 per cent in the year to March, reflecting a slump in items such as car parts, organic compounds and chip-making machinery. China’s economy shrank for the first time on record in the first quarter as the virus hit production and spending hard, piling pressure on authorities to do more to stop job losses.

But while China is restarting its economic engines after bringing the outbreak under control, demand has plunged in many other countries after they imposed lockdowns to contain the pandemic. US-bound shipments, another key market for Japanese goods such as cars and electronics, fell 16.5 per cent year-on-year in March, biggest decline since April 2011, weighed by drops in demand for cars, airplane motors and construction and mining machinery. Shipments to Asia, which accounts for more than half of Japanese exports, declined 9.4 per cent.

The global economy is expected to shrink 3.0 per cent in 2020 in a collapse of activity that would mark the steepest downturn since the Great Depression of the 1930s, the International Monetary Fund said last week. The pandemic has now infected more than 2.2 million and killed more than 150,000 people globally.

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Oil plunges to 2002 lows, shares sink again

LONDON/SYDNEY (Reuters) – Oil took another eyewatering 8% tumble on Monday and world shares buckled again as fears mounted that the global coronavirus shutdown could last for months.

There were some bright spots, with Australian equities posting a standout jump as the government launched a super-sized support programme, but that was about it.

Japan’s Nikkei had led the rest of Asia lower and Europe’s main markets slumped by 1.5-2.5% in early trade, adding to what has already been the region’s worst quarter since 1987.

The rout in oil took crude to its lowest since 2002. Brent was at only $22 a barrel by 0815 GMT, hammering petro currencies such as Russia’s rouble, Mexico’s peso and the Indonesian rupiah by as much as 2%.

It didn’t help that the U.S. dollar was back on the climb. The euro and pound were both batted back by about 0.6%, leaving the former near $1.1070 and sterling at $1.2350. On Friday Britain had become the first major economy to have its credit rating cut because of the coronavirus.

“I have been in this business almost 30 years and this is the fastest correction I have seen,” Lombard Odier’s Chief Investment Officer Stephane Monier said of this year’s plunge in global markets.

Wall Street futures had also backpeddled into the red, having been up as much as 1% in Asia after a late flutter of optimism.

Australia’s benchmark ASX200 registered a late surge, closing 7% up after Prime Minister Scott Morrison unveiled a $130 billion ($79.86 billion) package to help to save jobs.

Most other markets were down but trimmed earlier losses. Japan’s Nikkei dropped 1.6%, Shanghai blue chips were down 0.9% and there were sharper drops in Southeast Asia, with Singapore’ benchmark index down almost 3%.

JPMorgan now predicts that global GDP could contract at a 10.5% annualised rate in the first half of the year.

“We continue to mark down 1H20 global GDP forecasts as our assessment of both the global pandemic’s reach and the damage related to necessary containment policies,” said JPMorgan economist Bruce Kasman.

As a result, central banks have mounted an all-out effort to bolster activity with rate cuts and massive asset-buying campaigns, which have at least eased liquidity strains in markets.

China on Monday became the latest to add stimulus, with a cut of 20 basis points to a key repo rate, the largest in nearly five years.

Singapore also eased as the city state’s bellwether economy braced for a deep recession while New Zealand’s central bank said it would take corporate debt as collateral for loans.

Rodrigo Catril, a senior FX strategist at NAB, said the main question for markets was whether all the stimulus would be enough to help the global economy withstand the shock.

“To answer this question, one needs to know the magnitude of the containment measures and for how long they will be implemented,” he added.

“This is the big unknown and it suggests markets are likely to remain volatile until this uncertainty is resolved.”

DOLLAR NOT DONE YET

Bond investors looked to be bracing for a long haul, with European government bond yields dipping and those at the very short end of the U.S. Treasury curve turning negative. Those on 10-year notes dropped a steep 26 basis points last week and were last standing at 0.68%.

That drop has combined with efforts by the Federal Reserve to pump more U.S. dollars into markets, dragging the currency off recent highs.

Against the yen, the dollar was pinned at 107.74, well off the recent high of 111.71, but its gains against the euro, pound and heavyweight emerging market currencies suggested it was regaining strength.

“Ultimately, we expect the USD will soon reassert itself as one of the strongest currencies,” argued analysts at CBA, noting the dollar’s role as the world’s reserve currency made it a countercyclical hedge for investors.

“This means the dollar can rise because of the deteriorating global economic outlook, irrespective of the high likelihood the U.S. is also in recession.”

The dollar’s retreat had provided a fillip for gold, but buying stalled as investors were forced to liquidate profitable positions to cover losses elsewhere. The metal was last at $1,613.6 an ounce.

Oil prices have also been hit by a fight for market share between Saudi Arabia and Russia, with neither showing signs of backing down even as global transport restrictions hammer demand.

Brent futures were down 8%, or $2, at $22.50 a barrel – their lowest for 18 years. U.S. West Texas Intermediate (WTI) crude futures fell as far as $19.92, near a 2002 low hit this month.

“Central banks have been easing (monetary policy) and governments have been offering stimulus packages, but they are only supportive measures, not radical treatments,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

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