TOKYO, March 27 — Asian stocks rose today as investors wagered policymakers will roll out additional stimulus measures to combat the coronavirus pandemic after US unemployment filings surged to a record.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.0 per cent. Australian shares were up 2.02 per cent, while Japan’s Nikkei stock index rose 3.65 per cent.
E-Mini futures for the S&P 500 rose 0.81 per cent in Asia following three consecutive days of gains in the S&P 500 on Wall Street.
The dollar nursed losses against major currencies as central banks’ steps to solve a dollar shortage in funding markets started to gain traction.
The US House of Representatives is expected to pass a US$2 trillion (RM8.5 trillion) stimulus package later today that will flood the world’s largest economy with money to stem the damage caused by the pandemic.
The US Federal Reserve has already slashed rates to zero and launched quantitative easing. The Fed will also take the unprecedented step of offering a direct backstop for corporate loans.
The United States is now the country with the most coronavirus cases, surpassing even China, where the flu-like illness first emerged late last year. Policymakers may need to offer more stimulus as the virus slams the brakes on economic activity and increases healthcare spending.
“I’m not sure what measures are left, but the reaction in stocks shows some people hoping for more stimulus thought the market was a little oversold,” said Yukio Ishizuki, FX strategist at Daiwa Securities in Tokyo.
“Currencies tell a different story. The dollar is the lead actor. The mad rush to buy dollars due to liquidity concerns is starting to fade.”
The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the coronavirus pandemic ground the country to a sudden halt, data showed yesterday.
The jobless blowout was announced shortly after Federal Reserve Chairman Jerome Powell said that the United States “may well be in recession,” an unusual acknowledgement by a Fed chair that the economy may be contracting even before data confirms it.
Global equity markets took the data in their stride, partly because most central banks have already aggressively eased policy and governments are backing this up with big fiscal spending.
Leaders of the Group of 20 major economies pledged yesterday to inject over US$5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic.”
In the currency market, the greenback fell 0.25 per cent to 109.34 yen in Asia today, on pace for a 1.3 per cent weekly decline.
The dollar was also headed for weekly declines against the Swiss franc, the pound, and the euro .
The US currency’s fall after two weeks of gains suggests that the Fed’s efforts to relieve a crunch in the dollar funding market are working, some analysts said.
The yield on benchmark 10-year Treasury notes rose slightly in Asia to 0.8383 per cent, while the two-year yield edged up to 0.2946 per cent.
Yields were still headed for a weekly decline, taking cues from the Fed’s extraordinary steps to bolster markets and the US$2 trillion stimulus package.
US crude ticked up 1.77 per cent to US$23 a barrel in Asia. Energy markets have been caught in a tug-of-war between hopes for stimulus spending and worries about excess supplies of crude.
Gold, normally bought as a safe haven, was slightly lower. Spot gold fell 0.30 per cent to US$1,626.58 per ounce.
Gold market participants remained concerned about a supply squeeze following a sharp divergence between prices in London and in New York. The coronavirus has grounded planes normally used to transport gold and closed precious metals refineries. — Reuters
