Via Financial Times

The rally in global stocks continued after Wall Street notched its best three-day run since the 1930s, as investors cheered government stimulus efforts and despite the coronavirus outbreak continuing to wreak havoc on the global economy.

In early trading in Asia on Friday, Japan’s Topix stock index gained 1.6 per cent and South Korea’s Kospi rose 1.3 per cent. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks and Hong Kong’s Hang Seng were both up almost 1 per cent.

The moves came a day after Wall Street’s S&P 500 closed up 6.2 per cent on Thursday, capping off its sharpest three-day rise since 1933, after the US Senate approved a $2tn stimulus deal. 

The emergency bill to provide relief to taxpayers and businesses could be voted on in the House of Representatives on Friday. 

But some investors and analysts cautioned the rebound would not last against the dire economic background.

“Despite some relief in equity markets over the week, the picture for the global economy and markets still looks bleak,” said Daniel Been, a strategist at ANZ in Sydney.

“Governments will continue to impose restrictions on social mobility, severely curtailing activity,” he added. “Many businesses are searching for ways to maintain operational normalcy with restricted supply chains and fewer customers.”

Wall Street stock futures suggested the S&P 500 would open 1.1 per cent lower when trading begins later on Friday as the economic toll of coronavirus becomes apparent.

US data on Thursday revealed jobless claims surged to a record 3.3m in the week ending March 21 due to the pandemic. Figures on Friday showed China’s industrial profits plunged nearly 40 per cent year on year in February — a drop of almost $60bn — while South Korean consumer sentiment fell to its lowest since 2009.

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Analysts at ANZ forecast Asia’s gross domestic product growth could slow to 3.3 per cent this year, compared to more than 5 per cent in 2019. The economic damage could be even worse than feared, depending on how long the pandemic lasts, the analysts said.

Haven assets rose on Friday. Japan’s yen strengthened 0.9 per cent to ¥108.61 per dollar, while the 10-year US Treasury yield fell 4 basis points to 0.808 per cent. Yields fall as bond prices rise.