SHANGHAI • Asian stocks saw mixed trading yesterday in a holiday-hit session as investors mulled over new measures from the US Federal Reserve to cushion the fallout from the coronavirus pandemic. The US dollar remained under pressure.
Stocks slipped in Shanghai, and reversed losses to close higher in Tokyo and Seoul.
Australia, Hong Kong and Singapore were among the markets closed for Good Friday, alongside the United States and most of Europe.
The yuan ticked higher amid easing inflation data.
On Thursday, US stocks capped their biggest weekly gain since 1974 as investors looked past staggering jobless numbers to another series of sweeping steps from the Fed to provide as much as US$2.3 trillion (S$3.3 trillion) in additional aid. Junk bonds rallied the most since 1998 and Treasuries rose.
Gold climbed close to its highest since 2012.
Meanwhile, Dr Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, said the country’s fatalities from Covid-19 may be far fewer than earlier projections.
As fresh evidence of the economic toll from the pandemic floods in, investors are choosing to focus on unparalleled support from global policymakers.
The US central bank will wade into the municipal-bond market to an unprecedented degree, can now purchase “fallen angel” bonds from companies that have recently lost their investment-grade ratings, and has expanded its term asset-backed securities loan facility to include top-rated commercial mortgage-backed securities and collateralised loan obligations.
Separately, European Union finance ministers have agreed on a €540 billion (S$836 billion) package of measures to combat the economic fallout from the pandemic.
“The Fed news is really bullish (along with global fiscal news) if we have confidence on ways to deal with the Covid-19 bounce-back and ultimate vaccine solution,” said Mr Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “So positive outcomes on that front lead to fair value estimates going up, improving the risk reward from this level.”
BULLISH ON FED NEWS
The Fed news is really bullish … if we have confidence on ways to deal with the Covid-19 bounce-back and ultimate vaccine solution.
MR DENNIS DEBUSSCHERE, head of portfolio strategy at Evercore ISI.
Elsewhere, oil closed lower on Thursday as investors saw the Opec+ supply-curb proposal as insufficient to offset estimates for demand destruction from the Covid-19 outbreak.
The International Monetary Fund (IMF) has warned that 170 of its 180 members would see declines in per capita income this year.
“We anticipate the worst economic fallout since the Great Depression,” said IMF chief Kristalina Georgieva, urging governments to provide lifelines to businesses and households alike, and cautioned that “it could get worse”.
BLOOMBERG