Asian stocks have rallied for their ninth straight day and oil prices have jumped as the lifting of coronavirus lockdowns in many countries fed investor hopes of a relatively quick global economic recovery.The MSCI is up for the ninth straight session, its longest winning streak since early 2018, with most Asian markets up; Japan’s Nikkei has bucked the trend.
Markets have been particularly encouraged by a May US jobs report last week that showed a surprise fall in the unemployment rate, sending Wall Street indices surging, with the Nasdaq hitting a record close on Monday.
Global financial markets were battered in March as investors fretted over the extent of the short and longer term damage to the world economy from the coronavirus pandemic. But most indices are now back to pre-COVID-19 levels.
MSCI’s broadest index of Asia-Pacific shares outside of Japan rose for a ninth straight session on Tuesday for its longest winning streak since early 2018. It was last up 0.76 per cent at a three-month peak.
Australia’s S&P/ASX 200 jumped 2.5 per cent while Chinese shares started on a firm footing with the blue-chip CSI300 index rising 0.4 per cent. Hong Kong’s Hang Seng index climbed 1.2 per cent.
Japan’s Nikkei bucked the trend to be down 0.5 per cent.
“The good news is that this shows central banks’ effort to stabilise the market have worked,” said Tai Hui, chief Asia market strategist at JP Morgan Asset Management.
“The current risk rally is driven by investors’ belief that the worst of this recession is behind us, which we agree with. Yet investors need to be mindful of the potential risks ahead.”
Tai said the “road to recovery” was still long while the threat of a second wave of coronavirus infections cannot be ruled out yet.
Fears of renewed trade tensions between the United States and China, and the second round impact from higher unemployment and bankruptcies worldwide also hung heavy on the outlook
For now, though, investors were taking a glass-half-full view on the global economy.
Financial, automotive and retail-oriented and energy shares – the stocks most beaten-down since the pandemic slammed markets – have been leading world equity indices higher recently.
Overnight on Wall Street, the Dow rose 1.7 per cent, the S&P 500 gained 1.20 per cent and the Nasdaq Composite added 1.13 per cent.
US stocks were also bolstered by a move by the Federal Reserve to ease the terms of its “Main Street” lending program to encourage more businesses and banks to participate.
Investors are now seeking further clarity on US monetary policy after the Fed’s two-day policy meeting ends on Wednesday.
In currency markets, the risk-sensitive Australian dollar hit a five-month top of 70 cents to the US dollar after eight straight days of gains but has encountered some selling pressure at those heady levels.
Its New Zealand counterpart jumped to a four-month high.
The safe-haven Japanese yen also nudged up 0.2 per cent at 108.15, while the euro was off a touch at $US1.1285.
In commodities, US benchmark crude rose $US1.28 a barrel to $US38.68 a barrel while Brent added $US1.13 to $US41.25.
Gold prices were up after a steep decline, boosted by hopes of a dovish monetary policy outlook from the Fed. Spot gold was last up 0.1 per cent at $US1,697.1.