Asian shares mixed, Tokyo lower as Wall Street rally fades

BANGKOK  — Shares were mixed in Asia on Thursday after a 3.4% gain on Wall Street overnight as investors chose a positive focus for data about the coronavirus outbreak’s trajectory.

Japan’s Nikkei 225 index lost 0.4% after the central bank governor said the economy faces “extremely high” uncertainty over the likely impact of the pandemic. Shares rose in Hong Kong, Sydney and Shanghai.

Recent upward swings in markets have dwarfed declines amid signs that deaths and infections may be nearing a peak or plateau in some of the world’s hardest-hit areas.

That’s led some investors to begin looking to the other side of the economic shutdown that is gripping the world as authorities try to slow the spread of the coronavirus. The S&P 500 has jumped nearly 23% in the last two and a half weeks, building on earlier gains driven by massive amounts of aid promised by governments and central banks for the economy and markets.

“Risk assets continued to rally on the perception that the global economy will open up again quicker than expected,” Stephen Innes of AxiCorp said in a commentary.

The prospect for progress in talks among oil producers was a big driver of Wednesday’s rally, along with the signs of virus infections leveling off in several global hotspots and increased clarity in the U.S. presidential race, said Adam Taback, chief investment officer for Wells Fargo Private Bank.

Oil prices have been even more volatile than stocks recently as Russia and Saudi Arabia bicker over production levels as demand withers. Oil producers are set to meet on Thursday, and an announcement for production cuts to prop up the price of crude is possible.

“The icing on the cake, … a ‘good’ outcome for oil prices from the OPEC+ meeting would be a global agreement to cut output … beyond OPEC and Russia, although demand concerns will persist,” Innes said.

Benchmark U.S. crude oil rose 70 cents to $25.79 per barrel in electronic trading on the New York Mercantile Exchange early Thursday. It gained $1.46, or 6.2%, to settle at $25.09 a barrel on Wednesday, recovering some of its 9.4% slide from the day before.

Brent crude oil, the international standard, rose 44 cents to $33.28 per barrel. It gained 97 cents, or 3%, to $32.84 a barrel in London.

Many analysts say they’re skeptical of the recent stock rally given how much uncertainty still remains. The death toll continues to rise, millions of people are still losing their jobs by the week and the economic pain is worldwide.

The Nikkei 225 index fell to 19,268.26 after opening higher on Thursday. Shares also fell in Taiwan, Malaysia and Indonesia.

But futures for the S&P 500 and the Dow industrials edged higher. Hong Kong’s Hang Seng added 0.4% to 24,075.85 and the Shanghai Composite index gained 0.3% to 2,825.00. In Australia, the S&P/ASX 200 picked up 1.8% to 5,302.30 and South Korea’s Kospi was 0.8% higher, at 1,890.92.

Optimism rose in the U.S. Wednesday after Dr. Anthony Fauci, the top U.S. infectious diseases expert, said the White House is working on plans to eventually reopen the country. President Donald Trump later said it “will be sooner rather than later.”

“It’s positive that people are talking about reopening the economy,” said Jeff Buchbinder, equity strategist for LPL Financial. “The more we can focus on what the economy will look like several months out, the better it will be for markets.”
The S&P 500 climbed 3.4% to 2,749.98. The Dow Jones Industrial Average also rose 3.4%, to 23,433.57. The Nasdaq added 2.6% to 8,090.90.

Stocks that have been beaten down the most since the sell-off began in February helped lead the way, including energy companies, retailers and travel-related companies.

Gap rose 12.6%, United Airlines gained 12.4% and Diamondback Energy was up 13.5% as investors imagined people shopping again at stores, flying for vacations and driving to the office once stay-at-home orders are relaxed. All three, though, are still down more than 50% for 2020 so far.

Shares of health insurers and other stocks got an extra boost after Bernie Sanders suspended his presidential campaign. Investors had been wary of Sanders’ proposal of “Medicare For All” and other plans that could have restricted profits.

Another bounce came in the afternoon after the Federal Reserve released minutes from last month’s policy meeting that confirmed expectations the Fed will do “whatever it takes” to support markets, according to Bob Miller, head of Americas fundamental fixed income at BlackRock.

Companies are also preparing to report their financial results for the first three months of the year in upcoming weeks. The numbers are likely to be bleak, and investors don’t know how long that will last.

Treasury yields, which signaled worries about the economic damage from the coronavirus outbreak earlier than the stock market, were relatively steady. The yield on the 10-year Treasury was at 0.75%, from 0.76% late Wednesday.

Nearly 1.5 million cases of COVID-19 have been confirmed around the world, with more than 432,000 of them in the United States. More than 88,000 people have died from the virus, while nearly 330,000 have recovered, according to a tally by Johns Hopkins University.

 GSG