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GLOBAL MARKETS-Asian shares extend gains as economic recovery hopes build

Published 09/06/2020, 04:00 pm
Updated 09/06/2020, 04:06 pm
© Reuters.
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* MSCI ex-Japan index up for ninth straight session

* Longest winning streak for the index since early 2018

* Oil prices up on hopes of higher fuel demand as lockdowns ease

By Swati Pandey and Anshuman Daga

SYDNEY/SINGAPORE, June 9 (Reuters) - Asian stocks extended their winning streak for the ninth consecutive session on Tuesday and oil prices rose as the lifting of coronavirus lockdowns in many countries fed investor hopes of a relatively quick global economic recovery.

European markets were set to follow that lead with pan-European Euro Stoxx 50 futures STXEc1 up 0.4% and DAX futures FDXc1 rising 0.3%. U.S. S&P 500 futures ESc1 eased 0.15%.

The big bout of optimism for equity markets came last week after U.S. jobs data showed a surprise fall in the unemployment rate, sending Wall Street indices surging with the Nasdaq .IXIC closing at a record level on Monday. .N

Global markets were mauled in March as investors fretted over the extent of both the short- and longer-term damage to the world economy from the coronavirus pandemic. But most indices are now back to pre-COVID-19 levels.

MSCI's broadest index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS advanced for a ninth straight session for its longest winning streak since early 2018. It was last up 1% at a three-month peak and has risen 35% from 4-year lows struck in mid-March.

"The good news is that this shows central banks' effort to stabilise the market have worked," said Tai Hui, chief Asia market strategist at J.P. Morgan Asset Management.

"The current risk rally is driven by investors' belief that the worst of this recession is behind us, which we agree with. Yet, investors need to be mindful of the potential risks ahead."

Australia's S&P/ASX 200 .AXJO surged 2.6%, China's blue-chip CSI300 index .CSI300 advanced 0.7% and Hong Kong's Hang Seng index .HSI climbed 1.6%. Japan's Nikkei .N225 bucked the trend to be down 0.6%.

Tai said the "road to recovery" was still long while the threat of a second wave of coronavirus infections cannot be ruled out yet.

Fears of renewed trade tensions between the United States and China and the second round impact from higher unemployment and bankruptcies worldwide also hung heavy on the outlook.

For now, though, investors were taking a glass-half-full view on the global economy.

Financial, automotive and retail-oriented and energy shares - the stocks most beaten-down since the pandemic slammed markets - have been leading world equity indices higher recently.

Overnight on Wall Street, the Dow .DJI rose 1.7%, the S&P 500 .SPX gained 1.20% and the Nasdaq Composite .IXIC added 1.13%.

Equity strategists at Credit Suisse (SIX:CSGN) said the economic recovery was more likely to be "V-shaped", thanks to policy stimulus, and faster than the "U-shaped" recovery expected by investors, suggesting more upside for markets.

Credit Suisse economists expect "a return to pre-virus levels of GDP by mid-2022."

U.S. stocks were also bolstered by the Federal Reserve's move to ease the terms of its "Main Street" lending programme to encourage more businesses and banks to participate.

Investors are now seeking further clarity on U.S. monetary policy after the Fed's two-day policy meeting ends on Wednesday.

In currency markets, the risk-sensitive Australian dollar AUD=D3 hit a five-month top of $0.7043 after eight straight days of gains but has encountered some selling pressure at those heady levels.

Its New Zealand counterpart NZD=D3 jumped to a four-month high.

The safe-haven Japanese yen also nudged up 0.2% at 108.15, while the euro EUR= was off a touch at $1.1285.

In commodities, U.S. benchmark crude CLc1 rose 0.3% to $38.30 a barrel, while Brent LCOc1 was little changed.

Gold prices XAU= inched up after a recent steep decline, boosted by hopes of a dovish monetary policy outlook from the Fed.

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http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar

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http://tmsnrt.rs/2ihRugV MSCI All Country Wolrd Index Market Cap

http://tmsnrt.rs/2EmTD6j

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