Asian equities mostly rose on Friday, with traders buoyed by government and central bank pledges to prop up the global economy as the COVID-19 pandemic sends countries into lockdown.
Despite the painful toll the disease has been inflicting on lives and economies, markets were on course to end the week with healthy gains following a barrage of stimulus and monetary easing.
While the number of people contracting COVID-19 continues to escalate — the US now has more confirmed cases than China and Italy — the support measures, which the G20 said amounted to US$5 trillion, have given traders hope that the expected recession would be sharp, but short.
Even news that a record 3.3 million Americans last week claimed unemployment for the first time — smashing the previous all-time high of 695,000 set in 1982 — was unable to derail a rally in New York.
Morgan Stanley Wealth Management strategy and research head Dan Skelly said that stocks, which have been clobbered in the past several weeks, were showing signs of forming a bottom.
“While we do believe this will be possibly the sharpest recession in history, it may also be the shortest, so there is room to be optimistic for a second-half rebound,” he told Bloomberg TV.
The advance in Wall Street extended into Asia, where Tokyo’s Nikkei 225 on Friday finished up 724.83 points, or 3.9 percent, at 19,389.43, rocketing 17.1 percent from a close of 16,552.83 on March 19.
However, not all markets were able to sustain the rally, with some paring earlier gains and others going into negative territory.
Hong Kong’s Hang Seng on Friday ended up 131.94 points, or 0.6 percent, at 23,484.28, an increase of nearly 3 percent from a close of 22,805.07 on March 20.
The Shanghai Composite on Friday rose 7.29 points, or 0.3 percent, to 2,772.20, rising almost 1 percent from a close of 2,745.62 a week earlier.
Seoul’s KOSPI on Friday added 31.49 points, or 1.9 percent, to 1,717.73, a 9.7 percent surge from 1,566.15 on March 20.
Singapore added almost 2 percent, Bangkok gained 1.5 percent and Jakarta jumped almost 4 percent.
However, Mumbai fell 1.5 percent as investors brushed off a deep interest rate cut by the Indian central bank, while Sydney went into the weekend on the back of a 5.3 percent loss.
In Taipei, the TAIEX on Friday closed down 37.44 points, or 0.38 percent, at 9,698.92, but was still up 5 percent from a close of 9,234.09 a week earlier. Turnover totaled NT$180.16 billion (US$5.96 billion).
Wellington and Manila were also down after reversing early gains.
Support this week came from a US$2 trillion stimulus bill that had been making its way through the US Congress, and was late on Friday passed by the US House of Representatives before being signed into law by US President Donald Trump.
“For investors, this package should be good for US equities and other risk assets, as it should leave US corporations in a better position to weather the economic downturn and thrive in the rebound,” JP Morgan Asset Management’s David Kelly said.
US Federal Reserve Chairman Jerome Powell on Thursday said that the US central bank would continue to “aggressively” pump liquidity into the economy.
“When it comes to this lending, we’re not going to run out of ammunition. That doesn’t happen,” Powell said.
AxiCorp Financial Services Pty Ltd analyst Stephen Innes said: “The Fed’s bazookas appear to be filtering through, and that’s a massive positive the market is running with.”
However, “it’s impossible to gauge the ultimate economic impact or the duration of the COVID-19 pandemic for weeks, possibly months, and until that point, the sustainability of any rally in stocks is questionable,” he added.
CMC Markets analyst Michael Hewson said that the coronavirus infection and death rate would continue to rise sharply, and “in any subsequent recovery, consumer incomes and confidence will take some time to recover.”
Additional reporting by staff writer
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