Asian stocks push up for ninth day in a row

Sydney — Asian stocks rallied for their ninth straight day on Tuesday and oil prices jumped as the lifting of coronavirus lockdowns in many countries fed investors’ hopes of a quick global economic recovery.

Markets have been 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 both 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 Japan rose for a ninth straight session for its longest winning streak since early 2018. It was last up 0.76% at a three-month peak.

Australia’s S&P/ASX 200 jumped 2.5% while Chinese shares started on a firm footing with the blue-chip CSI300 index rising 0.4%. Hong Kong’s Hang Seng index climbed 1.2%.

Japan’s Nikkei bucked the trend to be down 0.5%.

“The good news is that this shows central banks’ effort to stabilise the market have worked,” said Tai Hui, chief Asia market strategist at JPMorgan 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 US 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-orientated 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%, the S&P 500 gained 1.20% and the Nasdaq Composite added 1.13%.

US stocks were also bolstered by a move by the Federal Reserve to ease the terms of its “Main Street” lending programme to encourage more businesses and banks to participate.

Investors are 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 $0.7043 after eight straight days of gains but has encountered selling pressure at those heady levels.

Its New Zealand counterpart jumped to a four-month high.

The safe-haven Japanese yen nudged up 0.2% at 108.15, while the euro was off a touch at $1.1285.

In commodities, US benchmark crude rose $1.28 a barrel to $38.68 a barrel, while Brent added $1.13 to $41.25.

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% at 1,697.1.

Reuters