Stock markets in the Asia-Pacific region mostly traded higher Friday, following a rally in U.S. markets as the government moved closer to approving the largest economic-relief package in history.
Japan’s Nikkei 225 closed 3.9% higher, taking its weekly gains to more than 15%, its first weekly rise since early February. South Korea’s Kospi Composite also broke a streak of down weeks, adding 9.7% over the last five days.
Hong Kong’s Hang Seng and the Shanghai Composite Index rose about 1% on Friday, while Australia’s S&P/ASX 200 fell 5%.
Singapore’s FTSE Straits Times Index gained 2% after the country rolled out a second stimulus package, of $33.2 billion, boosting government spending to fight the coronavirus to about 11% of GDP.
Fiscal stimulus has come in full force in the U.S., while central banks are pumping unprecedented amounts of funding into the financial system, said Sunny Ng, a multiasset portfolio manager at PineBridge Investments.
In just days, he said measures by the U.S. Federal Reserve had eclipsed the first two iterations of the massive bond-buying program, known as quantitative easing, which it first rolled out in the depths of the global financial crisis more than a decade ago.
That has helped bring down a previously huge demand for dollars and calmed the markets down, said Mr. Ng. “We are seeing a bit of a bear market rally here…it’s not uncommon to see such bouncebacks,” he said.
CMC Markets analyst Margaret Yang said the recent rebound could be “a false rally in the middle of a bear market,” given the collateral damage of coronavirus lockdowns were yet to be fully exposed, while cases are still surging in the U.S. and Europe.
Other market signals suggest investors remain on edge. Volatility remains high, with the Cboe Volatility Index at 61 on Thursday. The VIX index, also 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.
And safe-haven assets are still in demand, with bond yields remaining ultralow. On Friday, the yield on the 10-year U.S. Treasury note lost 0.055 percentage point to 0.797%. Bond yields fall as prices rise.
Gold prices are also not far from 7-year highs. The precious metal traded flat at $1,658 per troy ounce Friday afternoon in Asia.
Mr. Ng at PineBridge said a lot of uncertainties remain as this is a self-imposed economic crisis led by the massive shutdowns across the U.S. All eyes will be on whether the U.S. is reopening its economy in the next few weeks and its repercussions, he said.
The U.S. has overtaken China as the country with the most coronavirus cases with 85,991 confirmed infections, according to data compiled by Johns Hopkins University. Globally, more than half a million people have been infected across 176 countries and regions, and the death toll has surpassed 24,000.
The WSJ Dollar Index edged down 0.4% to 93.65. The index tracks the greenback against 16 other currencies.
S&P 500 futures traded 1% lower on Friday in Asia.
In Singapore, state-backed flag carrier Singapore Airlines said it would raise as much as $10.5 billion by issuing convertible bonds and shares, to help it ride out the crisis.
And India’s central bank slashed interest rates, bringing forward a scheduled policy meeting. Gov. Shaktikanta Das said “a war effort has to be mounted…involving both conventional and unconventional measures in continuous battle-ready mode.”
Write to Chong Koh Ping at firstname.lastname@example.org
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