By Tom Westbrook
SINGAPORE (Reuters) – Asian stocks posted gains Thursday, but the week’s rally lost momentum as investors seemed torn between relief from huge US stimulus deal and feared a spike likely unemployment claims and coronavirus cases.
After last-minute negotiations, the Senate backed a $ 2 trillion bill to help workers and industries affected by the pandemic. Yet concern has already arisen as to whether this will be enough to cushion an economic blow.
The largest MSCI Asia-Pacific equity index excluding Japan rose 1.3%, but regional performance was uneven.
The Nikkei broke three days of gains with a 3.5% drop, while Australia’s benchmark rose for a third day – its longest winning streak in six weeks.
Currency markets also alluded to the feeling of unease – the risky Australian dollar sank, the yen safe haven rose, as did many emerging market currencies.
Oil fell and American and European equity futures turned red after falling into positive territory during the session. The E-mini futures for the S&P 500 posted a final decline of 1% and the EuroSTOXX 50 futures fell by 1.4%.
“After these three crazy weeks of trading, we are now reaching a more static state,” said Margaret Yang, market analyst at CMC Markets brokerage in Singapore. “Bulls and bears fight with the same force. “
World markets have lost about a quarter of their value in the past six weeks of virus sales.
The passage of the stimulus bill in the Senate, as expected, swept the Asian indices slightly higher but the gains were marginal and ephemeral. The Hang Seng and the Shanghai Composite quickly returned to negative territory.
The case will now go to the House of Representatives, which could vote this week. Before that, we will get a glimpse of the scale of the economic destruction already caused.
The first unemployment claims in the United States are expected at 12:30 p.m. GMT, with forecasts in a Reuters poll ranging from 250,000 to 4 million.
RBC Capital Markets economists had expected a national figure of more than a million, but said “it is now ready to be many multiples of that” because the closings lead to deep layoffs.
“Something in the range of 5-10 million initial jobless claims is very likely,” they wrote in a note. This compares to a peak of 695,000 in 1982.
Citi Private Bank said the maximum total could reach 15-18% of the total US workforce, some 25 million people.
The president of the American Federal Reserve, Jerome Powell, should also appear on NBC television around 1100 GMT.
“WE DON’T KNOW HOW MUCH IT COULD BE”
The money at stake in the stimulus bill represents almost half of the $ 4.7 trillion the US government spends each year.
But this comes against a backdrop of bad news as the coronavirus spreads and more signs of economic damage.
“There have been so many incentives for this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney. “But the positivity associated with it is really just a feeling,” she said. “We don’t know how bad it could be. “
Worrying data from Singapore provided the latest index, with the economy experiencing its largest contraction in a decade in the first quarter and factories posting their largest production decline since the records started in 1983.
The governor of Tokyo asked residents to avoid going out and “act with a sense of crisis.” The number of coronavirus deaths in Spain has exceeded that of China and more than 21,000 people have died worldwide.
As far as currencies are concerned, the mood has led to the weakness of the US dollar and the riskier Australian.
The Australian dollar last fell 0.6% to $ 0.5924 and 1% less than the rise of the yen.
The safe haven yen rose 0.4% to 110.70 per dollar and the softer greenback supported emerging market currencies as the MSCI emerging market currency index hit a week-high.
Oil fell slightly as fears of falling demand did not exceed expectations of recovery. Futures on US crude oil fell 30 cents to $ 24.19 a barrel and Brent crude futures fell 0.5% to $ 27.26.
Gold fell 0.7% to $ 1,602.00 an ounce.
(Editing by Lincoln Feast)