SYDNEY (Reuters) – Asian stocks were raised by S&P 500 futures on Monday, and oil prices peaked for five weeks as countries’ efforts to reopen their economies hoped the world would be closer to emerging from recession.
FILE PHOTO: Pedestrians wearing face masks walk near an overpass with an electronic board showing stock information following a coronavirus disease outbreak (COVID-19) in the Lujiazui financial district of Shanghai, China, March 17, 2020. REUTERS / Aly Song / Photo file
Summer time is enticing much of the world to come out of blocking coronaviruses, as outbreak centers from New York to Italy and Spain are gradually removing restrictions that have kept millions chilled for months.
“The economies of Europe and the United States probably collapsed in April and are slowly starting to recover,” Barclays economist Christian Keller wrote in a note.
“However, input from most economies underscores the depth of the contraction, increasing the risks of long-term scarring that could undermine the recovery.”
Federal Reserve Chairman Jerome Powell took a cautious line in an interview over the weekend, saying the US economic recovery could extend deep into next year and a full return could depend on the coronavirus vaccine.
At the end of Sunday, Powell outlined the possible need for another three to six months of state financial aid for businesses and families.
Data on Friday showed that retail sales and industrial production fell in April, which put the US economy on the verge of its deepest contraction since the Great Depression.
Closer to domestic data in Japan confirmed that the world’s third largest economy fell into recession in the first quarter, which set it on course for its worst postwar decline, as the coronavirus is severe.
In addition to the uncertainty, there were trade tensions between the United States and China, with Beijing warning against the latest rules against Huawei.
MSCI’s broadest Asia-Pacific stock index outside Japan is still up 0.4 percent. Japan’s Nikkei .N225 rose 0.6% and China’s .CSI300 blue chips 0.3%.
More worrying were E-Mini futures for the S&P 500 ESc1, which added 1.1%, although the results of a bunch of US traders this week are likely to make a grim read.
EUROSTOXX 50 futures also won 1.5% and FTSE futures 1.4%.
Dealers have reported a lot of chatter about possible treatment for COVID-19 from drug maker Sorrento Therapeutics (SRNE.O), which saw its shares jump on Friday.
Another highlight will be the US Treasury Department’s first auction for its 20-year bond on Wednesday. The Treasury Department plans to borrow a record $ 3 trillion this quarter.
So far, the market has easily absorbed the flood of new debt with a 10-year yield, which remains in a narrow range of about 0.64%.
The dollar is also largely tied to the range, and its attractiveness is generally certain. Against a basket of currencies, it was last at 100,380, up 0.7% from last week.
The euro was stable at 1.0826 EUR =, while the dollar was stronger against the Japanese yen at 107.10 JPY =.
The pound hit a seven-week low of $ 1.2073 GBP = after the Bank of England’s chief economist said he was looking more urgently for options such as negative interest rates and buying riskier assets to support the economy.
In commodity markets, the flow of liquidity from central banks, combined with record low interest rates, helped lift gold to a seven-year high. The metal last rose 1.2 percent to $ 1,762 an ounce, with silver and palladium also on the roll.
Oil prices rose as demand rose as countries around the world eased travel restrictions.
Brent crude futures rose 96 cents to $ 33.46 a barrel, while US commodities rose 98 cents to $ 30.41.
Report by Wayne Cole; Edited by Sri Navaratnam and Richard Pullin