Asian markets rise on ripple effects of Fed’s stimulus measures
TOKYO — Asian shares rose Thursday, taking their cue from a surge on Wall Street as governments and central banks took more aggressive measures to fight the virus outbreak and its effects on the economy.
Japan’s benchmark Nikkei 225 NIK, +0.95% rose 0.9% in early trading and Australia’s S&P/ASX 200 XJO, +0.81% added 1%. South Korea’s Kospi 180721, +0.97% gained 0.7%. Hong Kong’s Hang Seng HSI, +1.63% was up 1.2%, while the Shanghai Composite SHCOMP, +1.97% was also up 1.2%. Shares were also higher in southeast Asia.
The gains on Wall Street more than recouped big losses from a day earlier as wild, virus-fueled swings around the world’s markets extend into a third week.
Stocks rose sharply from the get-go, led by big gains for health care stocks after Joe Biden solidified his contender status for the Democratic presidential nomination. Investors see him as a more business-friendly alternative to Bernie Sanders.
The rally’s momentum accelerated around midday after House and Senate leadership reached a deal on a bipartisan $8.3 billion bill to battle the coronavirus outbreak. The measure’s funds would go toward research into a vaccine, improved tests and drugs to treat infected people.
Investors are also anticipating other central banks will follow up on the Federal Reserve’s surprise move Tuesday to slash interest rates by half a percentage point in hopes of protecting the economy from the economic fallout of the new coronavirus. Canada’s central bank cut rates on Wednesday, also by half a percentage point and citing the virus’ effect.
“The fact that you get an $8 billion bill, that’s money that will be spent, hopefully, on something that really will have an impact on mitigating the effects on the economy,” said Tom Martin, senior portfolio manager with Globalt Investments.
Some measures of fear in the market eased. Treasury yields rose but were still near record lows in a sign that the bond market remains concerned about the economic pain possible from the fast-spreading virus. Companies around the world are already saying the virus is sapping away earnings due to supply chain disruptions and weaker sales, with General Electric GE, +0.64% becoming the latest to warn its investors.
Even though many investors say they know lower interest rates will not halt the spread of the virus, they want to see central banks and other authorities do what they can to lessen the damage. The S&P 500 sank 2.8% on Tuesday after a brief relief rally triggered by the Fed’s rate cut fizzled.
“Monetary policy can only take us so far, but at least it’s a step,” said Jack Ablin, chief investment officer at Cresset. “Investors will take comfort in coordinated central bank action. I take comfort in knowing this isn’t the plague, we’ll eventually get through this.”
The Bank of England has a meeting on March 26 on interest rates. The European Central Bank and others have already cut rates below zero, meanwhile, which limits their monetary policy firepower. But economists say they could make other moves, such as freeing up banks to lend more.
An indicator of fear in the market, which measures how much traders are paying to protect themselves from future swings for the S&P 500, sank 14.1%.
Indexes jumped on Monday, and the Dow had its best day in more than a decade on rising anticipation for coordinated support from the Fed and other central banks. That followed a dismal week that erased gains for 2020.
The S&P 500 SPX, +4.22% rose 126.75 points, or 4.2%, to 3,130.12. The benchmark index has had five days in the last two weeks where it swung by more than 3%. In all of last year, it had just one.
The Dow DJIA, +4.53% gained 1,173.45 points to 27,090.86. The Nasdaq COMP, +3.85% climbed 334 points, or 3.8%, to 9,018.09. The index, which is heavily weighted with technology companies, now has a slight gain for the year.
Benchmark crude oil CLJ20, +1.26% rose 66 cents to $47.44 a barrel. It fell 40 cents to settle at $46.78 a barrel. Brent crude oil BRNK20, +1.45% , the international standard, gained 80 cents to $51.93 a barrel.
The dollar USDJPY, -0.17% fell to 107.36 Japanese yen from 107.55 yen on Wednesday.
Source: Read Full Article