Asia shares extend gains as economies slowly re-open, oil rallies

By Administrator_India

Capital Sands

Asian shares rose for a third session on the trot on Wednesday as investors took heart from easing coronavirus lockdowns in some parts of the world while oil prices jumped on hopes demand will pick up.

Risk assets including equities have rallied for most of this month thanks to heavy doses of fiscal and monetary policy stimulus around the globe aimed at softening the economic blow from the COVID-19 pandemic.

Positive news around potential treatments for the infection as well as progress in developing a vaccine have also boosted sentiment recently.

Moreover, investors have regained some confidence as parts of the United States, Europe and Australia are gradually easing restrictions while New Zealand this week allowed some businesses to open.

Japan’s markets were closed for a public holiday.

Australian shares  rose 1.2% led by energy and resources firms while South Korea added 1.2%.

Chinese markets opened in the black with the blue-chip index  up 0.6%.

All the same, analysts were circumspect about the rally.

Darby said the number of stocks above their 260-day moving average was still very low across emerging market and developed market indexes while the number of stocks making new highs versus new lows is about equal.

The equity gains have come even as analysts predict a sharp contraction in world growth.

Markets were next looking for any guidance from the U.S. Federal Reserve, which is due to issue a policy statement at the close of its two-day meeting on Wednesday. The European Central Bank meets on Thursday.

Analysts said it was unlikely the Fed would make further major policy moves, given the scope and depth of its efforts to counter the economic damage caused by the coronavirus.

On Wall Street overnight, investors dumped tech giants despite an earnings beat from Alphabet Inc’s Google , driving all three major U.S. stock indexes into the red.

The Dow Jones Industrial Average  fell 0.3%, the S&P 500 lost 0.5% and the tech-heavy Nasdaq Composite  dropped 1.4%.

Investors are now watching out for the other major tech firms – Facebook , Amazon  and Apple.

In currencies, the dollar weakened against the Japanese yen to 106.52 on concerns the coronavirus could spread further than previously thought if businesses reopened prematurely.

The euro  was up 0.3% at $1.0848 though the euro index eased after Fitch cut Italy’s credit rating to BBB-, just one notch above “junk” status.

The dollar index  against a basket of currencies fell 0.2%.

In commodities, U.S. crude jumped 15.7% to $14.29 per barrel, and Brent  was up 4% at $21.28 after U.S. stockpiles rose less than expected.

U.S. crude was trading above $50 a barrel just in February.

Gold was a touch higher at $1,710.61 an ounce.