AFP – Asian markets rallied again Thursday despite China’s virus claiming hundreds of lives and infecting tens of thousands, with investors welcoming another record close on Wall Street and strong US jobs data.
Equities gained across the board on building optimism that the outbreak, which has spread to more than 20 countries, can be contained and the economic impact limited.
After last week’s big losses, and a near eight-percent drop in Shanghai on Monday, observers said traders have been coming back on relatively low valuations, with reasonably healthy earnings reports also providing much-needed support.
Analysts generally have expressed confidence the illness will be largely contained to China and the economic harm will not be lasting.
Huge cash injections by the Chinese central bank into the country’s financial markets have also soothed investor concerns.
“The markets are not only holding up, but they’re going up,” said AxiCorp analyst Stephen Innes. “And to suggest risk appetite continues to ‘creep’ back in favour might be the biggest understatement of the week as equity markets just burst higher.”
He added that while the World Health Organization played down reports that a cure might soon be developed, the “any progress on treatment may also be a comfort to investors that the longer-term secondary effects of the outbreak are contained”.
In early trade, Hong Kong — which lost almost six percent last week — rose 1.3 percent, having risen by similar amounts the two days previously. Shanghai added 0.2 percent and Tokyo went into the break more than two percent higher.
– Crude builds on rally –
Seoul rallied 1.8 percent, Sydney climbed 0.8 percent and Taipei piled on 0.9 percent, with Manila and Jakarta also well up.
Investors took their lead from another surge on Wall Street where the S&P 500 and Nasdaq chalked up new records after figures showed private firms added a forecast-smashing 291,000 new jobs last month, marking the biggest gain since December 2014.
The news bodes well for closely watched non-farm payrolls data on Friday that will provide a clearer snapshot of the world’s top economy.
Another report showed activity in the crucial US services sector accelerated for the second straight month.
“What a difference a couple of days makes. Last week the news on the coronavirus was very much in the developing stage and markets could not see through the fog of negative implications,” said National Australia Bank’s Gavin Friend.
“As this week wears on, the combination of more positive news is able to lift markets, even while the coronavirus continues to show no signs of slowing down.”
Oil prices rallied more than one percent, having soared more than two percent Wednesday as investors bet on OPEC and other major producers led by Russia cutting output.
Observers said kingpin Saudi Arabia was looking for a reduction of half a million barrels a day, with some reports saying twice that amount was possible.
“Investors are turning optimistic that OPEC+ will deliver an appropriate response to alleviate concerns,” said Innes.
However, the expectation is that prices will eventually drop owing to the hit to demand in China, the world’s biggest consumer of the commodity, with travel massively restricted throughout the country.
– Key figures around 0300 GMT –
Shanghai – Composite: UP 0.7 percent at 2,836.45
Hong Kong – Hang Seng: 1.8 percent at 27,258.83
Tokyo – Nikkei 225: UP 2.1 percent at 23,803.19 (break)
Dollar/yen: UP at 109.85 yen from 109.83 yen at 2220 GMT
Euro/dollar: DOWN at $1.0995 from $1.0999
Pound/dollar: DOWN at $1.2985 from $1.2993
Euro/pound: UP at 84.68 pence from 84.62 pence
Brent Crude: UP 1.1 percent at $55.89 per barrel
West Texas Intermediate: UP 1.4 percent at $51.47
New York – DOW: UP 1.7 percent at 29,290.85 (close)
London – FTSE 100: UP 0.6 percent at 7,482.48 (close)