Connect with us
Click me!

Business

Asian markets cheered by reopening moves

Agence France-Presse

Published

on

Reopening of major economies worldwide continued to push equities higher Thursday. (Photo: Asia News)

Optimism over the reopening of major economies across the planet continued to push equities higher Thursday, as investors looked past building China-US tensions for now, though there remain worries about the uncertain global outlook.

Even Hong Kong managed to limit losses despite a US decision to revoke its special status that could see it lose key privileges, bringing into doubt its future as a global financial hub.

The move is the latest volley in an increasingly acrimonious row between the world’s two economic superpowers, with Donald Trump’s accusations over Beijing’s part in the coronavirus outbreak, Huawei and trade also causing friction.

Still, despite the threat of another trade war, investors are focusing on the easing of lockdowns around the world, with people from Asia to Europe to the US slowly coming out of hibernation.

Adding to the upbeat mood was news that Disney plans to reopen its Florida theme parks and a decision by Nevada’s governor to agree to let Las Vegas casinos to reopen with restrictions.

Trillions of dollars in stimulus and central bank support has also provided dealers with much-needed confidence, and the European Union on Wednesday became the latest to flag a program.

Leaders put forward a 750 billion euro ($825 billion) proposal to the European Parliament and member states, aiming to help the worst-affected countries with a mix of grants and loans. If passed, the deal would be the biggest EU stimulus package in history.

“This is Europe’s moment,” EU Commission chief Ursula Von der Leyen said, adding: “We either all go it alone, leaving countries, regions and people behind… or we walk that road together.”

Tokyo went into the break two percent higher, Sydney jumped more than two percent and Seoul rallied 0.8 percent, while Singapore was up 0.4 percent.

Taipei, Manila and Jakarta were also higher.

Hong Kong was down 0.1 percent, though there are concerns about the troubled city’s outlook after the US move to strip its special status which means its trading privileges, including lower tariffs than mainland China, could be removed.

The announcement came as China gets set to impose a controversial security law that will give Beijing more control over the city.

“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” Secretary of State Pompeo said in a statement.

Lingering concerns

AxiCorp analyst Stephen Innes said traders remain in the market for riskier assets.

“As the equity market rally continues, the once-extensive laundry list of things investors cared about is dwindling by the hour,” he said in a note.

“You can add renewed concerns about US-China relations and unrest in Hong Kong to that list of things the market seems to care little about.

“In the meantime, the incomprehensibly-large global stimulus will continue to bolster risk sentiment as the market attempts to compartmentalise trade war risk from the reopening narrative.”

However, David Kelly of JP Morgan Asset Management said many concerns remain.

“Eventually we will see a recovery but to be honest I think analysts are still way too optimistic about corporate profits,” he told Bloomberg TV.

“We are in for a much deeper profit slide than investors are expecting and that does make the stock market somewhat vulnerable.”

Eyes are on the release later in the day of US jobless claims, with expectations for another jump of almost two million, pushing the total to around 40 million since the pandemic began to spread.

Meanwhile, a Federal Reserve report described the outlook for businesses as “highly uncertain” with many companies “pessimistic about the potential pace of recovery”.

After weeks of big gains, oil markets extended losses after being stopped in their tracks Wednesday by data showing a surprising jump in US stockpiles, denting optimism over a pick-up in demand as lockdowns are eased.

The commodity was already under pressure after Russia indicated it could ease back on its output cuts — agreed last month with other major producers — that have helped ease a supply glut crisis.

Advertisement
Click to comment