Asian stocks saw mixed trading Friday in a holiday-hit session as investors mulled new measures from the Federal Reserve to cushion the fallout from the coronavirus. The dollar steadied after an overnight decline.
Stocks slipped in Shanghai, and reversed losses to trade higher in Tokyo and Seoul. Australia, Hong Kong and Singapore were among markets closed for holidays, alongside the US and most of Europe. Earlier, US stocks capped their biggest weekly gain since 1974 as investors looked past staggering jobless numbers to another series of sweeping steps from the Fed to provide as much as $2.3 trillion in additional aid. Junk bonds rallied the most since 1998 and Treasuries rose. The yuan ticked higher amid easing inflation data.
Meanwhile, Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, said US fatalities from Covid-19 may be far fewer than earlier projections.
As fresh evidence of the economic toll from the coronavirus pandemic floods in, investors are choosing to focus on unparalleled support from global policy makers. The Fed will wade into the municipal-bond market to an unprecedented degree, can now purchase “fallen angel” bonds from companies that have recently lost their investment-grade ratings, and has expanded its Term Asset-Backed Securities Loan Facility to include top-rated commercial mortgage-backed securities and collateralised loan obligations.
Meantime, European Union finance ministers agreed on a 540 billion-euro ($590 billion) package of measures to combat the economic fallout of the global pandemic.
“The Fed news is really bullish (along with global fiscal news) if we have confidence on ways to deal with the Covid bounce-back and ultimate vaccine solution,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “So positive outcomes on that front lead to fair value estimates going up, improving the risk reward from this level.”
Elsewhere, oil closed lower as investors saw the OPEC+ supply-curb proposal as insufficient to offset estimates for demand destruction from the Covid-19 outbreak. The OPEC meeting ended with no deal as Mexico abandoned the talks. Gold traded close to its highest since 2013.
These are the main moves in markets:
- Japan’s Topix Index rose 0.9% as of 2 p.m. in Tokyo.
- Korea’s Kospi Index added 0.7%.
- Shanghai Composite fell 0.7%.
- The S&P 500 rose 1.5% Thursday.
- Europe’s Stoxx 600 rose 1.6% Thursday.
- The yen rose 0.1% to 108.41 per dollar.
- The offshore yuan traded at 7.046 per dollar, up 0.2%.
- The euro bought $1.0939, up 0.1%.
- The yield on 10-year Treasuries fell five basis points to 0.72% Thursday.
- West Texas crude fell 9.3% to $22.76 a barrel Thursday.
- Gold rose 0.5% to $1 692 an ounce.