Hong Kong ended a volatile trading week with gains, while Asia-Pacific stocks were mixed Friday, as traders weighed which steps to take to protect themselves from the economic upheaval of the coronavirus pandemic.
More than 23,000 people have died in the world, and one third of the planet’s population is in lockdown.
Meanwhile, US claims for unemployment benefits skyrocketed to 3.3 million – the largest by far in history and up from about 200,000 just three weeks ago. A US$2 trillion stimulus bill to help businesses and workers stay afloat is awaiting US House passage soon, and President Donald Trump promises to sign it.
The Hang Seng Index closed up 0.6 per cent at 23,484.28, to finish with a weekly gain of 3 per cent.
Friday’s performance was a tame ending to a volatile week. The Hang Sang plunged 4.8 per cent on Monday, rose 4.5 per cent on Tuesday, gained 3.8 per cent on Wednesday, and slipped 0.7 per cent on Thursday.
“From now on, the market will stabilise a bit, because the wave of panic selling and liquidation has been over,” Alex Wong, director of asset management at Ample Capital.
He sees a shift out of Hong Kong stocks related to tourism – Macau casino stocks fell Friday, for example, even though the market rose – as well as retail, restaurants and local property in favour of such new economy stalwarts as Tencent and Alibaba, which closed with gains. (Alibaba is the owner of the South China Morning Post.)
“From now on, we will see polarisation in the market. People will avoid many retail stocks, restaurants, or travel-related stocks,” Wong said, adding in Hong Kong property.
The Shanghai Composite Index finished with a 0.3 per cent gain.
Other Asia-Pacific markets were mixed, as volatility on virus uncertainty continued.
US futures were down, after a three-session rally by the Dow Jones index that Bloomberg said was its biggest since 1931, during the Great Depression.
The virus continues its vicious march across the globe.
The US, quickly becoming the latest epicentre of the health catastrophe, now has the largest number of confirmed coronavirus cases in the world, according to data by Johns Hopkins University and The New York Times, at more than 85,000. Grim scenes are emerging: nurses wearing plastic trash bags due to inadequate protective gear, a makeshift morgue set up outside a New York City hospital awaiting an expected surge in virus deaths, and ethics debates over possible no-resuscitation policies for coronavirus patients.
Meanwhile, Federal Reserve chairman Jerome Powell, vowing to do whatever it takes on NBC’s Today Show, said the US economy could rebound in the second quarter of the year. The Fed has lowered its key benchmark to near zero and launched an unlimited bond buying programme.
“We’re not going to run out of ammunition. That doesn’t happen,” Powell said.
“There is nothing fundamentally wrong with our economy. We start in a very strong position. This is not something wrong with the economy,” Powell said.
Some analysts saw positive signs amid the mayhem.
“Jobless claims [in the US] were horrible, and there’s no way to sugarcoat that, but the market never lives in the present. The Fed’s bazookas appear to be filtering through, and that’s a massive positive the market is running with,” said Stephen Innes, chief global market strategist at currency trading platform AxiCorp.
“By their policy design, the US dollar is starting to back off its rush, and most importantly, signposts targeted by Fed policies have begun to show signs of less stress. So, while the jobless claims were gloomy, investors like what they see as the Fed bazookas shots appear to be hitting their targets.”
In the region, Tokyo’s Nikkei 225 closed up 3.9 per cent.
Seoul’s Kospi gained 1.9 per cent, while the tech-heavy Kosdaq increased 1.2 per cent.
Australia’s S&P/ASX200, closed down 5.3 per cent. It has seen a lot of volatility this week: It plummeted 5.6 per cent on Monday, then rose 4.2 per cent Tuesday, shot up 5.5 per cent on Wednesday, and gained 2.3 per cent on Thursday.
New Zealand’s S&P/NZX50, which shot up 4 per cent on Wednesday and gained an additional 4 per cent on Thursday, slid 0.8 per cent.
Edward Moya, senior market analyst at OANDA, expects the global market rally to fade.
“Unfortunately, the virus spread will intensify into developing nations and the massive fiscal stimulus will fall short in preventing permanent damage to the economy. It is hard to go against Fed and friends, but this economic downturn could be much worse than what many initially were hoping for,” he added.
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