By Associated Press
Asian markets advanced on Friday after Wall Street logged a third straight day of gains with the approaching congressional approval of a massive coronavirus relief bill.
Japan’s Nikkei 225 index /zigman2/quotes/210597971/delayed JP:NIK -0.18% rose 1.2% by midday Friday, and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.05% gained 1.7%. The Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -0.74% in Hong Kong advanced 1.2%, while the Shanghai Composite index /zigman2/quotes/210598127/delayed CN:SHCOMP +0.22% edged up 1.4%. Jakarta’s benchmark /zigman2/quotes/210597981/delayed ID:JAKIDX +0.79% jumped 7.2% and Singapore’s /zigman2/quotes/210597985/delayed SG:STI -0.18% climbed 2.9%. In Australia, the S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -1.63% fell 2.6%.
Wall Street appeared to shrug off miserable news on unemployment as the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.48% rose 6.2%, bringing its three-day rally to 17.6%. The Dow industrials /zigman2/quotes/210598065/realtime DJIA -0.07% have risen an even steeper 21.3% since Monday.
Nearly 3.3 million Americans applied for unemployment benefits last week, easily shattering the prior record set in 1982, as layoffs and business shutdowns sweep across the country.
Analysts said the market shot higher Thursday because the bad news on unemployment was expected. The gains earlier this week came as Capitol Hill and the Federal Reserve promised an astonishing amount of aid for the economy and markets, hoping to support them as the outbreak causes more businesses to shut down by the day.
“There is no sugar coating these numbers — they are bad,” said Jamie Cox, managing partner for Harris Financial Group. “Markets have had several days to digest what everyone knew was coming; therefore, the market response to these numbers may differ than what people might expect.”
Despite the big gains, the S&P 500 remains 22% below its February high and analysts expect more dire economic headlines, and market turbulence, in the days ahead.
Companies are also expected to report discouraging results in just a few weeks as earnings season begins. Very few have dared to issue forecasts capturing how big a hit the virus will inflict on their profits.
Late Wednesday, the Senate unanimously approved the $2.2 trillion plan, which includes direct payments to U.S. households and aid to hard-hit industries. The House of Representatives is expected to approve it Friday.
The prospect of a big financial shot in the arm for businesses and households helped offset some of the concerns about the steep job losses the economy is beginning to see due to the coronavirus.
It also reassured world markets.
Investors still need to see stability in banks and, especially, in oil prices to maintain confidence, because markets could be in for another slide if oil goes below $20 a barrel, said Andrew Slimmon, managing director and senior portfolio manager at Morgan Stanley Investment Management.
Benchmark U.S. oil was steady, gaining 27 cents to $22.87 per barrel in electronic trading on the New York Mercantile Exchange. It slid 7.7% on Thursday to settle at $22.60 a barrel. Goldman Sachs has forecast that it will fall well below $20 a barrel in the next two months because storage will be filled to the brim and wells will have to be shut in.
Brent crude , the international standard, added 14 cents to $28.79 per barrel.
“I wouldn’t necessarily say that where the market was yesterday we won’t see that again,” Slimmon said. “There is bad news still to come.”
In currency trading, the dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.1672% fell to 108.39 Japanese yen from 109.62 yen late Thursday.
Despite the solid rally this week, analysts say further big drops are common until there have been enough sustained gains in the market to ease investors’ fear of further declines.
“Historically, you do test the bottom one, two, three times before you’re convinced it’s over and then you build up again toward that viable rally,” said Quincy Krosby, chief market strategist at Prudential Financial. “What you have here, obviously, is a concern about how deep the recession is going to be and when are we going to come out.”