Shares in Asia rose Thursday, building on a U.S. surge, as investors welcomed growing signs of coordinated action to counter the economic impacts of the fast-spreading coronavirus.
Benchmarks in Japan, Australia, South Korea, Hong Kong and Shanghai all rose more than 1%. The Shanghai Composite closed 2% higher, taking it back into positive territory for the year.
Olivier d’Assier, head of applied research for Asia-Pacific at Qontigo, a financial analytics firm, said markets had grown very reactive, surging or falling on virus-related news, as investors shied away from making longer-term bets.
“Every day, we’re given a reason to buy or sell,” he said. “Last night, [investors] were given two reasons to buy.”
The U.S. rally was fueled partly by a strong performance by moderate Democrat Joe Biden, the former vice president, in the Super Tuesday presidential primaries, and by the House passing an $8 billion emergency spending package to combat the coronavirus, which the Senate will also likely pass this week.
Meanwhile, the International Monetary Fund detailed the $50 billion in lending programs it has that could help countries grappling with the virus.
Eli Lee, head of investment strategy at Bank of Singapore, said he viewed recent market action in the U.S. and Asia as more noise than signal. “The rebound is the latest in a series of gyrations we’ve seen, and reflects the fact equities were likely oversold over the near term,” he said, citing the bank’s house view on stock valuations.
Mr. Lee said a coordinated international monetary and fiscal response would help boost financial conditions and investor sentiment, but added: “These are ultimately very blunt tools against a medical crisis that is poised to cause a sharp shock to consumer demand and production.”
Shares rose in Asia early Thursday.
Photo: kazuhiro nogi/Agence France-Presse/Getty ImagesS&P 500 futures were down 0.6%, suggesting U.S. stocks could be more subdued when trading starts in New York later. And havens like U.S. Treasurys and the Japanese yen remained in demand as investors continued to seek safer assets.
The yield on the benchmark 10-year U.S. Treasury stood at 1.016%, slightly above the record lows below 1% registered this week. Bond yields rise as prices fall. The yen rose 0.2% to 107.33 per U.S. dollar.
The Cboe Volatility Index, or VIX, last week topped 40 to hit its highest level since 2011. It stood just under 32 on Wednesday, still much higher than the midteen levels seen in early February. The index, sometimes known as Wall Street’s fear gauge, uses S&P 500 options prices to estimate how much investors expect stocks to fluctuate in the next 30 days.
With volatility elevated and gauges of investor confidence low, Mr. d’Assier at Qontigo said he expected markets to keep swinging. “We are going to be stuck in this for a while” he said. “You’ve got short-term traders buying on the stimulus and then you have medium- and long-term investors de-risking.”
Write to Chong Koh Ping at chong.kohping@wsj.com
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https://www.wsj.com/articles/global-markets-follow-u-s-stocks-higher-11583376176
2020-03-05 07:16:00Z
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