Asia shares mostly rise after meandering on pandemic worries

TOKYO (AP) — Asian shares were mostly higher yesterday after meandering on news about economies reopening, mixed with worries about the prolonged health risks from the new coronavirus.

Japan’s benchmark Nikkei 225 recouped earlier losses to finish at 20,037.47, up 0.6 per cent. South Korea’s Kospi gained 0.2 per cent to 1,927.88. Australia’s S&P/ASX 200 added 1.4 per cent to 5,404.80. Hong Kong’s Hang Seng was little changed, falling less than 0.1 per cent to 23,811.51, while the Shanghai Composite inched up 0.2 per cent to 2,875.59.

“Bright spots in the markets and the economy should not breed complacency about being out of the woods,” Riki Ogawa of Mizuho Bank said. “Fact is, even as economies prepare to emerge from varying degrees of lockdown, restoration of ‘normalcy’ is a much longer road.” Parts of Japan are gradually easing requests for people to stay home and for some businesses to stay closed, while worries deepen over case numbers rising.

The Keidanren, which represents more than 1,000 Japanese companies and regional economic groups, released guidelines for safer work, including instructions on having office workers coming into the office just three days each week to minimise commutes, and adapting workplaces for social distancing. Overnight, Wall Street rallied back from a sharp morning drop. The S&P 500 climbed 1.2 per cent to 2,852.20 in another scattershot day of trading, with many stocks flipping from the bottom of the leaderboard to the top following a few sharp reversals in momentum.

Wall Street has been wavering for weeks as it digests gargantuan moves the market made earlier this year, first down more than 30 per cent on worries over the coming recession and then up more than 30 per cent on hopes for a relatively quick rebound.

A currency trader walks near the screens showing the Korea Composite Stock Price Index (KOSPI), and the foreign exchange rates at the foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

Trading has been particularly erratic this week, as investors rethink bets that the reopening of economies around the world will allow for a relatively quick return of growth. Another possible flare-up in tensions between the world’s largest economies is also hitting markets, with comments from United States (US) President Donald Trump about China further weighing on them on Thursday.

The Dow Jones Industrial Average rose 1.6 per cent to 23,625.34. The Nasdaq composite gained 0.9 per cent to 8,943.72 after erasing its earlier loss of 1.8 per cent.

Thursday’s turnaround was powered in large part by a rally for stocks that have been pummelled for much of this year: banks.

Financial stocks in the S&P 500 jumped 2.6 per cent for the biggest gain among the 11 sectors that make up the index. Wells Fargo rose 6.8 per cent, and Bank of America added four per cent.

Through much of this year, investors have sold bank stocks on worries that low interest rates and the severe recession will mean less profit for making loans.

By the end of trading, more than 75 per cent of stocks in the S&P 500 were higher. In the morning, more than 90 per cent were down.

Before the recession hit, US stocks quickly lost just over a third of their value as investors anticipated an avalanche of layoffs hitting the economy.

Those fears have turned out to be true, and a report on Thursday showed that nearly three million US workers filed for unemployment benefits. That brings the total to roughly 36 million in the two months since the pandemic caused widespread orders for people to stay at home and businesses to shut down.

But stocks began climbing in late March after massive amounts of aid promised by the Federal Reserve and Capitol Hill convinced markets that the worst-case scenario of a financial crisis wouldn’t be happening. Many professional investors have warned the rally has been overdone, given how much uncertainty exists about how long the recession will last.

The yield on the 10-year Treasury was steady at 0.62 per cent. It tends to fall when investors are downgrading their expectations for the economy and inflation.

In Asia yesterday, US benchmark crude added 63 cents to USD28.19 a barrel. Brent, the international standard, added 95 cents to USD32.08 a barrel.

The US dollar rose to JPY107.22 from JPY107.25. The euro was virtually unchanged at USD1.0806, from USD1.0805.