Asia stocks pull ahead on U.S. stimulus, oil rebound

WASHINGTON/SYDNEY (Reuters) – Asian stock markets rose on Thursday as the combination of a rebound in crude prices from historic lows and the promise of more U.S. government aid to cushion the coronavirus-ravaged economy helped calm nervous markets.

Better-than-expected U.S. corporate earnings also lifted equities, analysts said, though overall sentiment remained fragile as the pandemic cut a destructive path through the world economy.

E-mini futures for the S&P 500 climbed 0.25% after staying mostly flat during Asian hours while London’s FTSE futures were mostly unchanged. European stock futures nudged up with the Eurostoxx 50 up 0.3% and Germany’s DAX futures rising 0.4%.

MSCI’s broadest index of Asia Pacific shares outside of Japan bounced from two-week lows to be up 0.6% at 460.43 points.

Australian S&P/ASX reversed early gains to close 0.1% lower, led by losses in the healthcare sector. Chinese shares also gave up gains with the blue-chip index down 0.1%. Japan’s Nikkei climbed 1.5%.

South Korea’s KOSPI index rose 1.09% while Hong Kong’s Hang Seng index added o.5%.

The gains followed a strong overnight lead from Wall Street with the Dow up 2%, S&P 500 adding 2.3% and Nasdaq rising 2.8%.

All 11 S&P 500 sector indexes climbed as the U.S. Senate unanimously approved the new relief package, adding to trillions of dollars in stimulus that has helped Wall Street rebound from its March lows.

The House of Representatives is expected on Thursday to clear the relief, which would be the fourth coronavirus measure passed by Congress, and would boost the overall federal financial response to almost $3 trillion.

Stock markets may have bottomed out after the impressive bounce since a rout last month, analysts said.

Even so, the recent recovery has been narrowly focussed on the big tech firms, said Seema Shah, chief strategist at Principal Global Investors.

Four out of every five stocks are still in a bear market while European benchmark equity indices and the U.S. small-cap index are also in bear territory, “throwing severe doubts on the impression that investors are optimistic about the outlook,” she added.

However, Shah believes market positioning may now work to propel markets higher, helped by solid policy stimulus around the world.

“Investors have built up meaningful cash positions suggesting that, not only is indiscriminate selling behind us, but investors have sufficient dry powder to take advantage of attractively valued risk assets.”

In Europe, traders were buoyed after Italy breezed through a major debt sale on Tuesday and speculation continued that the European Central Bank would provide more support measures.

Still, it may take European Union countries until the summer if not longer to agree on how to finance aid to help economies recover from the pandemic as major disagreements persist, a bloc official said on Wednesday.

Brent oil extended gains on Thursday to surge 9.7% to $22.35 a barrel on the prospects for further production cuts to reduce the glut in the oil market.

U.S. crude jumped 12% to $15.50. U.S. crude futures fell deep into negative territory on Monday as the market grappled with a supply glut and cratering demand.

In currencies, the dollar was barely changed against the Japanese yen at 107.72. It fell against the risk sensitive currencies of Australia and New Zealand to $0.6340 and $0.5974, respectively.

The euro was a shade firmer at $1.0834 while the British pound also rose to $1.2362.

That left the dollar index at 100.22, down 0.24%.

Source: Read Full Article