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Equities build on gains as reopenings trump geopolitical tensions
HONG KONG, May 26, 2020 (BSS/AFP) – A further easing of lockdown measures
across the planet continued to push equities higher in Asia on Tuesday, with
the reopening of bars, cafes, pools and beaches overshadowing China-US
tensions.
Hong Kong was among the big gainers as the Hang Seng ate away at a loss of
more than five percent suffered on Friday after China proposed a security law
for the city that has many fearing for the future of the financial hub.
While some countries such as Brazil and Russia are still suffering with
rising death and infection tolls, an increasing number of governments are
seeing their figures tail off enough to attempt to get societies back to some
form of normal.
“The positive take on the mobility data suggests fear about the coronavirus
is ebbing,” said Stephen Innes of AxiCorp.
“Government support during lockdowns has given many people income to spend.
If anxiety is not too significant, they will rush out to shopping malls.
“Ultimately, the consumer will need to do the bulk of the heavy-lifting so
confidence to get out of the house and start to live a normal life… will be
critical to this recovery.”
Adding to the broadly positive outlook is optimism about progress on a
vaccine, which would allow the shattered global economy to start bouncing
back.
But Chris Iggo, at AXA Investment Managers, added: “That does not mean we
should ignore the risk of second waves, prolonged weak growth and geopolitical
issues.”
Tokyo ended the morning more than two percent higher, while Sydney, Seoul,
Taipei and Wellington all climbed more than one percent.
Singapore also put on more than one percent on hopes for fresh stimulus
measures by the city-state as the government warned the economy could shrink
as much as seven percent this year. Shanghai and Jakarta each added 0.8
percent.
– Oil builds on rally –
Hong Kong jumped more than two percent, with analysts saying investors took
some heart from comments by China’s point man in the city, in which he said
the proposed new security law would not affect the financial hub’s judiciary,
autonomy and cherished “one country, two systems” policy.
Beijing’s decision to push the law on Friday sent the Hang Seng tumbling
more than five percent and ramped up already high tensions with Donald Trump,
who has continually hit out at China for its role in the spread of the
coronavirus.
But National Australia Bank’s Rodrigo Catril said that while their standoff
is simmering, “equity investors appear more interested in the prospect of
economies reopening around the globe”.
Crude markets pushed on with their recovery, having suffered a
spectacularly bad April, when WTI crashed below zero.
The reopening of economies and a massive cut in output by some of the
world’s top producers has helped the US benchmark virtually double in value
this month.
“The market is starting to witness the effect of output cuts along with a
reduction in inventories, while the global economy is on its path to
recovery,” Will Sungchil Yun, of VI Investment Corp, told Bloomberg News.
“Still, there’s caution with the absence of a cure for the pandemic as well
as the possibility of a second wave of infections.”
– Key figures at around 0230 GMT –
Tokyo – Nikkei 225: UP 2.2 percent at 21,197.04 (break)
Hong Kong – Hang Seng: UP 2.0 percent at 23,403.68
Shanghai – Composite: UP 0.8 percent at 2,839.37
West Texas Intermediate: UP 2.4 percent at $34.05 per barrel
Brent North Sea crude: UP 1.0 percent at $35.88 per barrel
Euro/dollar: UP at 1.0913 from 1.0896 at 2100 GMT Friday
Dollar/yen: UP at 107.85 yen from 107.71 yen
Pound/dollar: UP at $1.2212 from $1.2195
Euro/pound: UP at 89.37 pence from 89.35 pence
London – FTSE 100: Closed for public holiday
New York – Dow: Closed for public holiday
BSS/AFP/MMA/0915HRS