Asian stocks mixed after US Senate approves virus aid

BEIJING (AP) — Asian stocks were mixed yesterday after the United States (US) Senate approved a proposed USD2.2 trillion virus aid package following a delay over its details and sent the measure to the House of Representatives.

Tokyo’s market benchmark shed 4.5 per cent and Shanghai and Hong Kong also declined.

Australia and Southeast Asian markets gained. Jakarta rose almost 10 per cent.

On Wall Street, the future for the benchmark S&P 500 index was down 1.1 per cent. That for the Dow Jones Industrial Average lost 0.8 per cent. The S&P 500 rose 1.2 per cent on Wednesday but is down nearly 27 per cent from its peak a month ago.

The Senate approved the package to blunt the impact of business shutdowns due to the COVID-19 outbreak late Wednesday despite arguments over whether it does too much or too little for companies, workers and health care systems.

The measure goes to the House, which is expected to approve it today.

The delay in approval “brings about a wait-and-see tone for markets,” said Jingyi Pan of IG in a report issued before the Senate approval.

People wearing face masks walk past Hong Kong Stock Exchange. PHOTO: AP

The package, the biggest relief bill in US history, is intended as relief for an economy spiralling into recession or worse due to an infection that has killed more than 21,000 people worldwide. US Treasury Secretary Steven Mnuchin, asked how long the aid would keep the economy afloat, said, “We’ve anticipated three months. Hopefully, we won’t need this for three months.”

Tokyo’s Nikkei 225 fell 4.5 per cent to 18,664.60 and the Shanghai Composite Index dropped 0.6 per cent to 2,765.66.

The Hang Seng in Hong Kong declined 0.9 per cent to 23,313.16.

The Kospi in Seoul lost 0.9 per cent to 1,688.12 and Sydney’s S&P-ASX 200 added 2.3 per cent to 5,113.30.

India’s Sensex jumped 4.2 per cent to 29,739.44.

The Jakarta benchmark rose 9.6 per cent and other Southeast Asian markets also advanced.

Singapore’s benchmark lost one per cent after a government forecast the economy will shrink 10.6 per cent in the current quarter compared with the three months ending in December.

Singapore is preparing its second stimulus package as more businesses are told to close and controls on public activity are tightened.

Global stock prices have swung wildly as business shutdowns spread around the world. Investors said they need to see a decline in numbers of new COVID-19 infections before prices can bottom out.

Many traders have “reverted to the 2008 case study”, when markets saw several five per cent rallies during the global financial crisis before bottoming out in March 2009, Chris Weston of Pepperstone said in a report.

The US aid package would be the country’s largest stimulus ever, but an early rally on Wall Street faded as disagreements over its details blocked a congressional vote, raising questions about when the plan might take effect.

Republican Senators Tim Scott, Ben Sasse and Lindsey Graham demanded changes to ensure laid-off workers don’t receive more money than they did while working. Senator Bernie Sanders said he would block the bill unless the conservatives dropped their objections.

The S&P 500 advanced to 2,475.66 and the Dow rose 2.4 per cent to 21,200.55. The Nasdaq lost 33.56 points to 7,384.30.

Even optimists said the package provides just the second leg of three that markets need to regain lasting confidence.

Global central banks have cut interest rates and injected money into financial markets.

Investors are still waiting to see the details of Washington’s plan. It includes direct payments to most Americans and aid for hard-hit industries. It’s unclear when the House of Representatives could vote on it.

The number of known infections has leaped past 450,000 people worldwide, and more than 20,000 have died, according to Johns Hopkins University. Overall, over 112,000 have recovered.

For most people, the new COVID-19 causes mild or moderate symptoms such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness including pneumonia and death.

Economists expected a report yesterday to show a record number of Americans filed for unemployment benefits.

Boeing soared 24.3 per cent on Wednesday on expectations it stands to gain from the aid package.

Other travel-related stocks also stormed higher to recoup a fraction of their losses.

Royal Caribbean Cruises jumped 23 per cent but is down 68.2 per cent for the year.

Nike climbed nearly 9.2 per cent after it said stronger online sales in China during the COVID-19 outbreak helped it offset plunges in revenue caused by the shutdown of stores across the country. The company said it will follow a similar playbook in other countries as the outbreak has spread around the world. It also said sales are bouncing back in China, where the outbreak has eased and most Nike stores have reopened.

In energy markets, benchmark US crude lost 33 cents to USD24.16 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 48 cents on Wednesday to close at USD24.49. Brent crude, used to price international oils, declined 23 cents to USD29.76 per barrel in London. It rose 24 cents the previous session to USD27.39 a barrel.

The dollar declined to JPY110.68 from Wednesday’s 111.20.

The euro gained to USD1.0905 from USD1.0880.