AFP /Hong Kong
Equities rallied again yesterday on optimism over the easing of lockdown measures, massive stimulus and signs that the worst of the global economic downturn may be over.
While tensions between China and the US continue to play in the background, the general mood at the start of June remains upbeat, helping Hong Kong climb around 8% this week, while crude was on course for another positive week as demand picks up.
However, traders are turning their attention to the release of key US jobs data later in the day, expecting to see the highest unemployment rate in 90 years.
After a soft start to the day caused by profit-taking from a healthy four-day rally, Asian markets kicked on in the afternoon to sit well up.
Tokyo’s Nikkei ended 0.7% higher, Hong Kong surged 1.7%, Seoul and Singapore climbed more than 1% and Shanghai added 0.4%.
Sydney edged 0.1% higher, Mumbai gained 0.5% and Taipei 0.8%. Bangkok and Jakarta also rose, though there were losses in Wellington and Manila.
In early trade, London, Paris and Frankfurt jumped more than 1%.
Hopes remain high that the world economy is on the right track to recovery following mind-boggling stimulus and central bank help, while countries from Asia to Europe and the US ease out of restrictions.
The latest support came from the European Central Bank, which on Thursday ramped up its emergency bond-buying scheme by a bigger-than-expected 600bn ($674bn) to 1.35tn.
Bank chief Christine Lagarde warned the eurozone economy would contract 8.7% this year, but predicted a rebound over the next two.
The focus now turns to Washington, where the Commerce Department is forecast to reveal another 8.5mn jobs were lost in May, sending the jobless rate to close to 20% or even higher.
Figures on Thursday showed 1.9mn more people applied for jobless claims last week, taking the total to more than 42mn because of the shutdowns.
“A gnarly (figure) is likely to herald the highest unemployment rate since the Great Depression,” said AxiCorp’s Stephen Innes.
“It will be hard for the US employment report for May...to shock markets, given the nonplussed reaction to recent labour market data.
“Still, the sticker shock of near-20% unemployment suggests US equities may need a rapid recovery in the critical job metrics to justify these elevated levels, let alone for stock markets to punch higher.”
Oil markets also rebounded from early losses and are on course for a sixth weekly rise as the reopening of economies boosts demand, while major producers led by Russia and Saudi Arabia close in on an agreement to extend their huge output cuts. And the dollar remained under pressure as investors bought into higher-yielding, riskier assets on reopening optimism, while the euro sat at its highest levels since March following the ECB’s bonds bazooka.
In Tokyo, the Nikkei 225 closed up 0.7% to 22,863.73 points; Hong Kong — Hang Seng ended up 1.7% to 24,770.41 points and Shanghai — Composite closed up 0.4% to 2,930.80 points yesterday.
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