Asian stocks mixed after US senate approves virus aid package

Asian stocks were mixed after the US senate approved a proposed 2.2 trillion dollar (£1.85 trillion) aid package to tackle the coronavirus.

Tokyo’s market benchmark shed 4.5% and Shanghai and Hong Kong also declined. Australia and south-east Asian markets gained, with Jakarta rising almost 10%.

On Wall Street, the future for the benchmark S&P 500 index was down 1.1%, while the Dow Jones Industrial Average lost 0.8%. The S&P 500 rose 1.2% on Wednesday, but it is down nearly 27% from its peak a month ago.

US senators approved the package to blunt the impact of business shutdowns due to the coronavirus outbreak late on Wednesday, despite arguments over whether it does too much or too little for companies, workers and healthcare systems.

The measure will now go to the US house of representatives, which is expected to approve it on Friday.

The package, the biggest relief bill in US history, is intended as relief for an economy spiralling into recession or worse due to an infection that has killed more than 21,000 people worldwide.

Tokyo’s Nikkei 225 fell 4.5% to 18,664.60 and the Shanghai Composite Index dropped 0.6% to 2,765.66. The Hang Seng in Hong Kong declined 0.9% to 23,313.16.

The Kospi in Seoul lost 0.9% to 1,688.12 and Sydney’s S&P-ASX 200 added 2.3% to 5,113.30.

India’s Sensex jumped 4.2% to 29,739.44. The Jakarta benchmark rose 9.6% and other south-east Asian markets also advanced.

Singapore’s benchmark lost 1% after a government forecast the economy will shrink 10.6% in the current quarter compared with the three months ending in December.

Hong Kong Financial markets
Hong Kong Financial markets

Singapore is preparing its second stimulus package as more businesses are told close and controls on public activity are tightened.

Global stock prices have swung wildly as business shutdowns spread around the world. Investors say they need to see a decline in numbers of new coronavirus infections before prices can bottom out.

Many traders have “reverted to the 2008 case study”, when markets saw several 5% rallies during the global financial crisis before bottoming out in March 2009, according to Chris Weston of the broker Pepperstone.

The US aid package would be the country’s largest stimulus ever, but an early rally on Wall Street faded as disagreements over its details blocked a congressional vote, raising questions about when the plan might take effect.

The S&P 500 advanced to 2,475.66 and the Dow rose 2.4% to 21,200.55. The Nasdaq lost 33.56 points to 7,384.30.

Economists expect a report due on Thursday to show a record number of Americans filed for unemployment benefits.

Boeing soared 24.3% on Wednesday on expectations it stands to gain from the aid package. Other travel-related stocks also stormed higher to recoup a fraction of their losses. Royal Caribbean Cruises jumped 23% but is down 68.2% for the year.

Nike climbed nearly 9.2% after it said stronger online sales in China during the coronavirus outbreak helped it offset plunges in revenue caused by the shutdown of stores across the country.

The company said it will follow similar tactics in other countries as the outbreak has spread around the world. It also said sales are bouncing back in China, where the outbreak has eased and most Nike stores have reopened.

In energy markets, benchmark US crude lost 33 cents to 24.16 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 48 cents on Wednesday to close at 24.49. Brent crude, used to price international oils, declined 23 cents to 29.76 per barrel in London. It rose 24 cents the previous session to 27.39 a barrel.