Asian shares higher after jobless data snaps Wall St rally

AP – Shares were mostly higher in Asia yesterday after US unemployment data gave the S&P 500 its first loss in five days.

Tokyo’s Nikkei 225 index gained 0.4 per cent to 22,790.65 after opening lower. The Hang Seng in Hong Kong edged 0.1 per cent higher, to 24,371.38. India’s Sensex rose 0.8 per cent to 34,265.86 and the Kospi in South Korea jumped 0.9 per cent to 2,169.87. Australia’s S&P/ASX 200 picked up 0.1 per cent to 5,996.80.

Shares rose in Bangkok, Taiwan and Singapore but fell back in Jakarta. Markets got some traction from hopes for more monetary and government stimulus as the European Central Bank (ECB)announced a commitment to buying USD680 billion more of bonds, nearly doubling its asset purchasing programme.

But the ECB also warned it expects the region’s economy to shrink 8.7 per cent this year due to the pandemic.

In the United States (US), hopes are rising for up to USD1 trillion in fresh stimulus in coming weeks.

Japan reported yesterday that household spending fell 11 per cent in April from the year before, nearly twice the six per cent decline in March.

Most attention is focussed on US unemployment data, analysts said.

“The good run for markets sees a pause into the end of the week, ahead of the US May labour market updates, with caution cascading across the market following the disappointing jobless claims reading,” Jingyi Pan of IG said in a commentary.

Overnight, the S&P 500 lost 0.3 per cent to 3,112.35 after being on track earlier in the day for its longest winning streak since last December.

The Dow Jones Industrial Average rose less than 0.1 per cent, to 26,281.82, and the Nasdaq composite fell 0.7 per cent to 9,615.81.

A report showed that the number of US workers filing for unemployment benefits eased for a ninth straight week, roughly in line with the market’s expectations.

But economists saw pockets of disappointment after the total number of people getting benefits rose slightly after dropping the week before.

That had raised hopes that some companies were rehiring workers.

Share prices have climbed recently on optimism that the recession brought on by the coronavirus pandemic might end quickly as economies reopen from shutdowns and travel resumes.

But many professional investors contend the recent rally, a nearly 40 per cent climb for the S&P 500 since late March, is overdone and say a pullback is likely.

Rising US-China tensions and the possibility of second waves of coronavirus infections are other reasons for caution, they said.

Economists expect the Labour Department’s monthly jobs report for May to show employers slashed 8.5 million jobs last month, down from 20.5 million in April.

That would push the unemployment rate to nearly 20 per cent from about 15 per cent.

On Thursday, American Airlines surged 41 per cent for the biggest gain in the S&P 500 after it said it plans to fly 55 per cent of its normal US schedule next month, up from only 20 per cent in April.

The S&P 500 is now within 8.1 per cent of its record set in February after earlier being down nearly 34 per cent.

The yield on the 10-year Treasury rose to 0.82 per cent from 0.81 per cent late on Thursday after rising decisively during the day.

It tends to move with investors’ expectations for inflation and the economy’s strength and was one of the first indicators warning of the coming economic devastation from the coronavirus outbreak.