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GLOBAL MARKETS-Asia shares follow Wall St higher, but virus risk lurks

Stock MarketsMar 05, 2020 08:24
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GLOBAL MARKETS-Asia shares follow Wall St higher, but virus risk lurks

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei up 0.8% early, investors still cautious
* Wall St surges, some relieved at Biden success
* Virus spread still causing deaths, economic dislocation
* Dollar regains some ground as yields rise off record lows

By Wayne Cole
SYDNEY, March 5 (Reuters) - Asian shares were looking to
rally for a fourth straight session on Thursday as U.S. markets
swung sharply higher and another dose of central bank stimulus
offered some salve for the global economic outlook.
Wall Street seemed to find relief in the strong performance
of former Vice President Biden in the Democratic nomination
campaign. Biden is considered less likely to raise taxes and
impose new regulations than rival Bernie Sanders. The U.S. House of Representatives also approved an $8.3
billion funding bill to combat the spread of the virus, sending
the emergency legislation to the Senate. In another wild swing the Dow .DJI surged 4.53%, while the
S&P 500 .SPX gained 4.22% and the Nasdaq .IXIC 3.85%. .N
Asian markets followed, if a little more cautiously. MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS added 0.2%, in its fourth day of gains.
Japan's Nikkei .N225 rose 0.8% and hard-hit Australian
shares finally managed a bounce of 1.6%. E-Mini futures for the
S&P 500 ESc1 dipped 0.4% after its overnight jump.
That was not to say the coronavirus news had got any
brighter, with mounting deaths across the globe, Italy closing
all of its schools and airlines cutting more flights.
"There is little doubt that the covid-19 outbreak will slow
global growth considerably this quarter, and we expect it to
actually produce a rare non-recessionary contraction in GDP,"
said JPMorgan economist Joseph Lupton.
He noted the bank's all-industry PMI measure of activity for
February slumped 6.1 points, the largest one-month drop on
record, and at 46.1 was at the lowest since May 2009.
The Federal Reserve and Bank of Canada had both responded by
cutting interest rates by 50 basis points, and markets in the
euro zone are pricing in a 90% chance that the ECB will cut its
deposit rate, now minus 0.50%, by 10 basis points next week.
Yet, as policymakers grapple with the best strategy to avoid
a global recession, some major central bank have been less keen
to follow suit. In the end, monetary policy was not a cure for the disease
and the impact was likely to get worse before it got better.
"As we test more folks for COVID-19 in the United States,
the case loads will rise and perhaps exponentially. So in the
short term, risk assets obviously remain beholden to COVID-19
headlines," Tom Porcelli, chief U.S. economist at RBC Capital
Markets.
"We have to get past the threshold where COVID-19 shifts
from panic to headline exhaustion and subsequent news on it
becomes more and more of a fade," he added. "Then risk assets
can move higher in earnest."

HEALTHY, FOR NOW
At least the U.S. economy was in healthy shape to face the
risks, with services sector activity jumping to a one-year high
in February, while private payrolls gained 183,000. The better data combined with the rally in stocks to nudge
10-year Treasury yields AU10YT=RR up from all-time lows under
1% to reach 1.05%. Yields had fallen for 10 straight days, the
longest slide in at least a generation.
That move gave the dollar a modest lift, with the euro
dipping back to $1.1131 EUR= from a two-month high of $1.1212
hit earlier in the week.
The dollar also inched up to 107.57 yen JPY= , from a
five-month trough of 106.84, while the dollar index firmed to
97.389 =USD . USD/
Gold steadied after jumping in the wake of the Fed's rate
cut, and was last at $1,637.13 per ounce XAU= . GOL/
Crude oil prices were mixed as major oil producers,
including Saudi Arabia, tried to bring Russia on board for
deeper supply cuts to try to offset a slump in demand. O/R
Brent crude LCOc1 futures were off 16 cents at $51.70 a
barrel, while U.S. crude CLc1 added 55 cents to $47.33.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Shri Navaratnam)

GLOBAL MARKETS-Asia shares follow Wall St higher, but virus risk lurks
 

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