Asian shares rally again on US stimulus hopes over coronavirus

Investors appear encouraged by measures from policymakers to help the economy through the COVID-19 outbreak.

    Asian shares posted strong gains for the second consecutive day on Wednesday after weeks of losses due to fears about the economic effects from the coronavirus outbreak [File: Aly Song/Reuters]
    Asian shares posted strong gains for the second consecutive day on Wednesday after weeks of losses due to fears about the economic effects from the coronavirus outbreak [File: Aly Song/Reuters]

    Asian shares extended their rally on Wednesday in the wake of Wall Street's big gains as United States Congress appeared closer to passing a $2 trillion stimulus package to curb the coronavirus pandemic's economic toll.

    MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 percent with Australian shares rising 4.5 percent and South Korean shares gaining 4 percent. Japan's Nikkei added 2 percent after rallying 7.13 percent on Monday.

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    Asian markets had lost about a third of their value from their highs of late February through to the end of last week.

    "Japanese shares have been bolstered by aggressive buying from the Bank of Japan and pension money this week. That has prompted hedge funds to cover their short positions," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

    Shares of Australian airline Qantas Airways also soared on Tuesday, climbing 30 percent after it secured 1.05 billion Australian dollars ($627.8m) against its aircraft fleet to help it ride out the coronavirus crisis.

    MSCI's gauge of stocks across the globe gained 8.39 percent, the largest single-day gain since the wild swings seen during the height of the global financial crisis in October 2008.

    On Wall Street, the Dow Jones Industrial Average soared 11.37 percent on Monday, its biggest one-day percentage gain since 1933, following broad gains in Asia and Europe.

    Senior Democrats and Republicans in the divided US Congress said on Tuesday they were close to a deal on a $2 trillion stimulus package to limit the coronavirus pandemic's economic toll. But it was unclear when they would be ready to vote on a bill.

    US stock futures were down 0.5 percent in early Asian trade on Wednesday.

    Investor fears about a sharp economic downturn are easing after the US Federal Reserve's offer of unlimited bond-buying and programmes to buy corporate debt.

    In the currency market, the US dollar has slipped as a greenback liquidity crunch loosened slightly.

    The euro traded at $1.0798 after four straight days of gains.

    The US dollar stayed firmer against the yen due to dollar demands at the March 31 end of the Japanese financial, trading at 111.33 yen, near a one-month high of 111.715 touched the previous day.

    Gold soared almost 5 percent, its biggest gain since 2008, on Tuesday and last stood at $1,633, in part helped by concerns lockdowns in major producer South Africa could disrupt supply.

    Still, the course of the market is still largely dependent on how much countries can slow the pandemic and how quickly they can lift various curbs on economic activity.

    Confirmed cases are now topping 400,000 globally with New York City suffering another quick and brutal rise in the number of infections to about 15,000.

    Oil prices steadied as hopes for US stimulus offset fears from falling global demand.

    India, the world's third-largest oil consumer, ordered its 1.3 billion residents to stay home for three weeks, the latest big fuel user to announce restrictions on social movement, which have destroyed demand for gasoline and jet fuel worldwide.

    The market remained pressured by a flood of supply after Saudi Arabia started a price war earlier this month, a move that dealt a crushing blow to markets already reeling from the epidemic.

    US crude futures rose 1.8 percent to $24.45 per barrel.

    SOURCE: Reuters news agency