Asian stocks rise as central banks pledge support

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Bank of Japan governor Haruhiko Kuroda

Share prices in Asia have reversed early falls after Japan’s central bank promised to support markets.

It comes after official data showed that Chinese factory activity fell in February at the fastest rate on record.

On Friday the US Federal Reserve made a similar pledge to intervene to stop further big falls on the world’s financial markets.

Last week concerns about the outbreak wiped more than $5 trillion from global stocks.

In a rare emergency statement, Bank of Japan (BOJ) Governor Haruhiko Kuroda said the central bank would take necessary steps to stabilise financial markets: “Overseas and domestic financial markets continue to make unstable movements due to heightening uncertainty over the impact on the economy from the spread of the coronavirus.”

“The BOJ will monitor developments carefully, and strive to stabilise markets and offer sufficient liquidity via market operations and asset purchases,” he added.

It follows a similar announcement by the chairman of the US Federal Reserve. On Friday Jerome Powell said the central bank is watching developments closely for risks to the US economy and promised to take action if necessary.

Data released on Saturday showed that China’s official Purchasing Managers’ Index contracted in February at the fastest rate on record. The fall, which was even worse than slump seen during the 2008 global financial crisis, highlights the outbreak’s huge impact on the world’s second-largest economy.

Over the weekend senior officials in President Donald Trump’s administration also tried to soothe concerns about the risk of recession, highlighting the US economy’s underlying strength.

US Vice President Mike Pence, who is leading the administration’s response to the coronavirus, said that the stock market “will come back”, adding that “the fundamentals of this economy are strong”.

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