• Friday, June 21, 2024
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BusinessDay

Global shares rally as investors bet on new stimulus

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Shares across Europe and the Asia-Pacific region rallied as investors pinned their hopes on Washington pushing through more support measures to limit the economic damage from the coronavirus crisis.

The continental benchmark Stoxx 600 gained 0.8 per cent early Tuesday. London’s FTSE 100 mirrored those gains, even after data showed that the UK has shed 730,000 jobs since the start of the outbreak.
Japan’s benchmark Topix index added 2.5 per cent on Tuesday as traders in Tokyo returned from a long weekend. Hong Kong’s Hang Seng index climbed 1.7 per cent while China’s CSI 300 of Shanghai- and Shenzhen-listed shares reversed gains to fall 0.4 per cent.

Wall Street’s S&P 500 was set to notch up a further 0.3 per cent gain when trading begins later in the day, as the US index came within 1 per cent of its intraday all-time high on Monday.

Investors are hopeful that US lawmakers would overcome gridlock in Congress to pass a support package that could cushion the economic blow from Covid-19.

“Faith in the recovery and further fiscal stimulus is already being tested in the United States,” said strategists at DWS, the asset management arm of Deutsche Bank. “Given that these are also voters and that elections are looming, we would expect an agreement to be reached eventually.”

Chinese technology shares steadied after two days of sharp losses. Companies have faced pressure after the Trump administration last week unveiled executive orders targeting social media apps TikTok and WeChat.

The Hong Kong-listed shares of Tencent, the owner of WeChat, rose 1.8 per cent while ecommerce group Alibaba was almost flat.

Rising US-China tensions have continued to rein in gains in global markets this week, as Beijing sanctioned 11 US citizens on Monday.

“No single piece of hard data” was driving gains on Tuesday, said Robert Rennie, global head of market strategy at Westpac, but the reopening of markets in Tokyo and Singapore had boosted liquidity.
However, he suggested that buoyant global equity markets were pricing in an overly optimistic economic scenario. “You continue to see signs of a V-shaped recovery for markets versus a W-shaped recovery from an economic perspective,” he said.

Oil prices were mixed, with the International Energy Agency set to make its forecasts on US oil production later on Tuesday. Brent crude, the international benchmark, was unmoved at $44.97 a barrel. US marker West Texas Intermediate climbed 0.2 per cent to $42.02 a barrel.

Gold slipped 1.4 per cent to just below $2,000 per troy ounce. The precious metal is down about 3 per cent since hitting an all-time high on August 7, with the US dollar trimming its losses by almost 1 per cent since then.