By Wayne Cole
SYDNEY (Reuters) – Asian stock markets were cautious on Monday on expectations for a week loaded with corporate earnings reports and economic data that will reverse the damage caused by the global virus lockdown, while US crude prices have fled early.
Japan said exports fell nearly 12% in March from a year earlier, as shipments to the United States fell more than 16%. The world’s first manufacturing readings for April are expected on Thursday and are expected to show recession readings.
US President Donald Trump said on Sunday that Republicans were “close” to reaching an agreement with the Democrats on a support plan for small businesses.
But the U.S. Centers for Disease Control and Prevention reported a 29,916 increase in new infections and said the number of deaths had increased from 1,759 to 37,202.
“The Fed will be a major buyer of risky assets in the coming months and has shown willingness to support virtually any part of the troubled domestic financial system,” said Oliver Jones, senior market economist at Capital Economics.
However, the particular composition of the S&P 500 was also a major factor, he added, as three sectors relatively resistant to virus-induced locking – IT, communications services and healthcare – represent about 50% of the index.
Indeed, Microsoft, Apple, Amazon, Alphabet and Facebook account for more than a fifth of the index.
“In addition, the S&P 500 is biased towards a few very large companies, some of which are also in these sectors. Their very size could make them more able to withstand a few months of dramatically low income than most. “
The rebound in the S&P 500 therefore likely overestimated economic optimism, Jones said, noting that the benchmark European and US small-cap indices are still in bearish territory.
Oil prices remained under pressure as the global foreclosure saw the demand for fuel evaporate, which prevented so many more countries from finding space to store it.
(Editing by Sam Holmes)