NEW YORK, June 4 — Stronger appetite for riskier assets is set to lift Asian equities today, as government stimulus expectations support investor confidence in economic recovery from the coronavirus.
E-mini futures for the S&P 500 were up 0.05 per cent and Australian S&P/ASX 200 futures rose 1.23 per cent in early trading. Japan’s Nikkei futures rose 1.1 per cent.
The safe-have US dollar continued to fall.
Markets for risk assets have been on a tear, carrying major stock market indexes to within sight of pre-pandemic, all-time highs.
MSCI’s gauge of stocks across the globe moved up for the seventh consecutive trading day yesterday with a gain of 1.68 per cent.
The rise came as the Nasdaq Composite, S&P 500 and the Dow Jones Industrial Average continued their rise from March coronavirus-lockdown-lows to come within 2 per cent, 8 per cent and 11 per cent, respectively, of overtaking all-time closing highs registered in February.
The dollar index fell 0.24 per cent against a basket of other currencies early today, having hit an 11-week low yesterday. The euro rose as high as US$1.1251, a level not seen since March 12.
“Liquidity provision by central banks — and expectations that more is coming — is helping to support the recent drive in risk markets,” ANZ Research senior economist Liz Kendall and strategist David Croy, said in a note early today.
But the analysts cautioned asset prices would need a recovery in the global economy to sustain gains.
Yesterday, the Dow rose 2.05 per cent, the S&P 500 gained 1.36 per cent and the Nasdaq Composite added 0.78 per cent.
The pan-European STOXX 600 closed at its highest since March 6. European markets have performed strongly so far this week as several countries eased strict lockdown measures.
The move to riskier assets continued to take down prices for US Treasuries. The yield on the benchmark 10-year reached 0.7333 per cent yesterday, up from 0.667 per cent on Tuesday.
A closely watched part of the US Treasury yield curve measuring the gap between yields on two — and 10-year Treasury notes, reached 55 basis points yesterday, the steepest level since mid-March. A steepening curve often points to a stronger economy.
Governments around the world have gradually started to lift tough lockdown measures imposed to contain the coronavirus which has infected nearly 6.4 million people and killed over 379,000.
Markets await tomorrow’s US Labor Department May jobs report, which is expected to show unemployment soaring to a post-World War Two high of nearly 20 per cent from 14.7 per cent in April.
Yesterday, a report showed that US private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen.
Investors are also focused on whether the European Central Bank will increase the size of its €750 billion (RM3.58 trillion) Pandemic Emergency Purchase Programme, when it meets today.
Oil prices rose again yesterday, briefly trading above US$40 a barrel, the highest since March, and reflecting increased demand.
Brent crude futures for August settled up 22 cents, or 0.6 per cent, at US$39.79 a barrel. The session high of US$40.53 was the highest since March 6. West Texas Intermediate (WTI) crude for July rose 48 cents, to US$37.29 a barrel.
Spot gold added 0.1 per cent to US$1,698.39 an ounce early on Thursday after losing 1.6 per cent yesterday.
— Reuters
