Global stocks track Wall St rally, Tokyo jumps nearly 5pc

TOKYO (AP) — Global shares rose yesterday, cheered by fresh moves by the United States (US) Federal Reserve to support markets battered by the coronavirus pandemic.

France’s CAC 40 gained 2.1 per cent in early trading to 4,914.50, while Germany’s DAX was up 2.4 per cent at 12,200.39. Britain’s FTSE 100 surged 2.5 per cent to 6,213.01. US shares were also set for gains, with Dow futures at 26,110.0, up 1.7 per cent. S&P 500 futures rose 1.2 per cent to 3,097.12.

“In case the generosity of the Fed was in any doubt, it is not. Global equity markets are recovering quickly,” after the Fed announcement, Chief Global Markets Strategist Stephen Innes at AxiCorp said in a report.

Japan’s benchmark Nikkei 225 surged 4.9 per cent to finish at 22,582.21 after the central bank promised more funding for corporate financing, though its minus 0.1 per cent benchmark interest rate and ultra-lax monetary stance remained unchanged.

South Korea’s Kospi gained 5.3 per cent to 2,138.05, while Australia’s S&P/ASX 200 jumped 3.9 per cent to 5,942.30. Hong Kong’s Hang Seng added 2.4 per cent to 24,344.09. The Shanghai Composite edged up 1.4 per cent to 2,931.75.

A man walks past an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo yesterday. PHOTO: AP

The Bank of Japan expanded its Special Program, including purchases of commercial paper and corporate bonds and its lending programmes for commercial banks, to JPY110 trillion from JPY75 trillion (USD1.02 trillion from USD690 billion).

In a statement, the Bank of Japan said the economy “is likely to remain in a severe situation for the time being due to the impact of COVID-19,” though it expects economic activity to resume gradually.

Governor Haruhiko Kuroda told reporters that recovery could come in the latter part of the year if the effects of the pandemic are mitigated. He stressed that meeting participants agreed the bank should take extra action if needed.

Flexibility is key because of uncertainties about the virus, he added.

“We don’t know yet when a treatment or vaccine can be developed or become available,” Kuroda said.

The Fed announced on Monday that it will buy individual corporate bonds as part of its previously announced programme to keep lending markets running smoothly and allow big employers to get access to cash.

The move was the latest reminder the Fed is doing everything it can to help support markets, analysts said. Central banks have repeatedly come to the economy’s rescue over the years, and it was huge, unprecedented moves by the Fed earlier this year that helped put a halt to the S&P 500’s nearly 34 per cent sell-off on worries about the recession coming out of the coronavirus pandemic.

Still, the number of COVID-19 cases is still growing in states across the country and nations around the world. Governments are relaxing lockdowns in hopes of nursing their devastated economies back to life, but without a vaccine, the reopenings could bring on further waves of COVID-19 deaths.

“More importantly and something that seems to get lost in every rebound narrative is whether consumer behaviour turns more cautious and inhibits a recovery in spending,” said Innes of AxiCorp.

Benchmark US crude rose 45 cents to USD37.57 a barrel. It rose 86 cents to USD37.12 a barrel on Monday. Brent crude, the international standard, added 63 cents to USD40.35 a barrel.

The dollar rose to JPY107.41 from JPY107.38 on Monday.

The euro cost USD1.1341, up from USD1.1322.