Asian shares waver despite $2 trillion US stimulus

Asian stock markets posted cautious gains on Thursday following two days of rallies, after the passage of a $2 trillion stimulus package in the United States to combat the economic fallout from the coronavirus.

Senate leaders in Washington, DC voted in favour  on the plan, which includes a $500bn fund to help hard-hit industries and a comparable amount for payments up to $3,000 to millions of US families.

Despite the enormous bill, investors appeared torn between relief at the agreement of a huge U.S. stimulus package and dread over a likely spike in US jobless claims, data on which will be released at 12:30 GMT.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3 percent but regional performances were patchy.

The Nikkei snapped three days of gains with a 3.5 percent drop, while Australia’s benchmark rose for a third day – its longest winning streak in six weeks.

“There has been so much stimulus thrown at this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney.

“But the positivity related to it is really just sentiment,” she said, adding that investors were largely flying blind with so many companies withdrawing earnings guidance. Jobless figures may offer a “reality check,” she said.

In perhaps an early sign of the fragile mood, the risk-sensitive Australian dollar dropped 1 percent and the safe-haven Japanese yen rose in morning trade.

US stock futures rose 1 percent, following the first back-to-back session rises on Wall Street in more than a month.

The Dow Jones Industrial Average rose 2.4 percent and the S&P 500 1.2 percent, while the Nasdaq Composite dropped half a percent following a Nikkei report that Apple was weighing a delay in the launch of its 5G iPhone.

“After this crazy three weeks of trading we are now coming to a more static state,” said Margaret Yang, market analyst at brokerage CMC Markets in Singapore. “Bulls and bears are fighting each other, with equal strength.”

Jobless claims to soar

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the US government spends annually.

But it also comes against a backdrop of bad news as the coronavirus spreads and as jobless claims are set to soar, with both expected to test the nascent bounce in markets this week.

California Governor Gavin Newsom told reporters on Wednesday that a million people in California had already applied for jobless benefits this month – a number that knocked stocks from session highs and has analysts bracing for worse to come.

RBC Capital Markets economists had expected a national figure more than 1 million in Thursday’s data, but say “it is now poised to be many multiples of that,” as reduced hours across the country drive deep layoffs.

“Something in the 5-10 million range for initial jobless claims is quite likely,” they wrote in a note.

That compares with a 695,000 peak in 1982. Forecasts in a Reuters news agency poll range from a minimum of 250,000 initial claims, all the way up to four million.

Trepidation seemed to put a halt on the US dollar’s recent softness in currency markets, with the dollar ahead by 1 percent against Australia and New Zealand’s currencies and up 0.6 percent against the pound.

It slipped 0.3 percent to 110.85 yen.

US crude slipped 1.5 percent to $24.11 per barrel and gold steadied at $1,608.14 per ounce.