Asia Stocks Rally, U.S. Futures Aided by Congress: Markets Wrap

(Bloomberg) — Stocks in Asia rallied after the best session for U.S. equities in almost a dozen years, and U.S. futures pared losses on news that the White House and Congress reached agreement on a stimulus plan.

The potential deal for an American fiscal package sent Japanese shares to their highs of the session. U.S. futures were still down, however; global equities haven’t posted back-to-back daily gains since the first half of February. Indexes in South Korea and Australia climbed more than 3% and Japan was up over 5%, after the S&P 500 soared 9.4% Tuesday. The dollar fell for a second day, in a tentative sign of reduced funding stresses. Treasuries were flat.

More than $20 trillion has been lost from equity markets since the peak in January, and investors have been left sifting the wreckage and weighing the chances of a lasting rebound. On the one hand, Wall Street has begun to argue that liquidations are nearing an end with real-money investors like pension funds ready to step in, and there are signs of improvement in some of the world’s regions that were hardest-hit by the virus. But the number of infections globally continues to accelerate and many of the largest economies are grinding to a halt.

“I feel very good being in cash right now because there are going to be phenomenal opportunities when the stimulus is finalized and if we look forward a month or two,” Carol Pepper, chief executive officer at Pepper International, told Bloomberg TV. “We still need to see a slowing of the virus cases and a peaking in the U.S., because until then we’ll have these huge relief-rally days and then we’ll get a scary day and the market will plunge down again.”

Tuesday’s gain in risk assets followed an unprecedented move by the Federal Reserve to backstop large swaths of the financial system. The Dow Jones Industrial Average rose more than 11% to clock its biggest advance since 1933. Still, key gauges of U.S. manufacturing and services in March fell the most on record, showing the deep toll the pandemic has already taken.

“We’ve seen a different market in the last few days,” Beverley Morris, director of fixed income at QIC Ltd., told Bloomberg TV. “There’s no question that what we’re going to see here is a very large expansion of the Fed’s balance sheet. We’re starting to see a very good opportunity here.”

Meantime, more countries tightened restrictions on residents as global cases topped 420,000. In India, where stocks underperformed on Wednesday, there is a three-week national lockdown. Elsewhere, gold edged lower after a recent surge, while oil added to gains.

These are the main moves in markets:

Stocks

Japan’s Topix index rose 5.5% as of 2:05 p.m. in Tokyo.S&P 500 futures fell 0.8%. The S&P 500 advanced 9.4% on Tuesday.South Korea’s Kospi index gained 3.9%.Hong Kong’s Hang Seng Index rose 2.5%.The Shanghai Composite gained 1.5%.Euro Stoxx 50 futures were flat.

Currencies

The yen traded at 111.38 per dollar, down 0.1%.The offshore yuan was little changed at 7.0781 per dollar.The euro bought $1.081.

Bonds

The yield on 10-year Treasuries dipped a basis point to 0.84%.Australia’s 10-year bond yield rose about eight basis points to 0.97%.

Commodities

West Texas Intermediate crude rose 4.1% to $24.98 a barrel.Gold fell 1.2% to $1,613 an ounce.

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.