Don’t miss the latest developments in business and finance.

Asian stocks mixed after Wall Street rises to record

Image
AP Tokyo
Last Updated : Feb 20 2020 | 1:24 PM IST

Shares were mixed Thursday in Asia after Wall Street recovered to record highs, with the Shanghai benchmark jumping nearly 2 per cent after China's central bank cut interest rates to help ease credit for companies stricken by the virus outbreak centered on the city of Wuhan.

Japan's benchmark Nikkei 225 gained 0.3 per cent to 23,479.15, shedding bigger early gains.

Australia's S&P/ASX 200 added 0.3 per cent to 7,162.50. and the Shanghai Composite index picked up 0.5 per cent to 2,989.31.

But South Korea's Kospi lost 0.7 per cent to 2,195.50.

Hong Kong's Hang Seng dipped 0.2 per cent to 27,611.67, while India's Sensex edged 0.1 per cent higher to 41,365.80.

Shares fell in Taiwan, Thailand and Singapore but rose in Jakarta.

More From This Section

Overnight, US stocks shook off their latest virus-induced losses, breaching new record highs.

Technology stocks led the rally, as Apple rallied to recover most of its loss from the prior day.

It dropped Tuesday after warning that revenue this quarter would fall short of forecasts due to the viral outbreak centered in China.

Worries remain about how disruptive the virus will be for manufacturing, travel and other economic activity across the region, but markets around the world rose as the number of new virus cases in China fell Wednesday.

Expectations are also high that China and other central banks around the world will limit the economic damage through injections of cash into markets, lower interest rates and other stimulus measures, said Shawn Cruz, manager of trader strategy at TD Ameritrade.

The S&P 500 rose 0.5 per cent to 3,386.15, surpassing its record set last week. The Dow Jones Industrial Average gained 0.4 per cent to 29,348.03.

The Nasdaq climbed 0.9 per cent to 9,817.18 and also set a record.

I think markets are a little too rosy now, Cruz said.

There is this assumption that the actual impact won't be much, and if there is one, central banks will be able to step in and keep us alive.

The companies most at risk to slowdowns in China are also those that have grown to become some of the biggest components of the S&P 500.

That gives their movements outsised effects on index funds, Cruz said.

For now, at least, investors seem to be confident that China's central bank, the Federal Reserve and other central banks can prop up the economy.

China cut its loan prime rate to 4.05 per cent from 4.15 per cent on Thursday, a move aimed at mitigating the economic damage from the COVID-19 sickness that is spreading mostly in China.

Low rates have been a key underpinning for the strong US stock market, which has rallied even though growth in corporate profits has been weak.

The Fed released minutes Wednesday afternoon from its last policy meeting, where officials said they see the current level of monetary policy as likely to remain appropriate for a time, at least until data on the economy shows a change in momentum.

Treasury yields rose Wednesday morning following a pair of stronger-than-expected reports on the US economy.

One showed stronger housing construction data than economists expected, while another showed inflation was higher than expected on the wholesale level in January.

But yields moderated as the day progressed.

The yield on the 10-year Treasury was steady at 1.56 per cent on Thursday.

A sluggish global economy has put the spotlight on companies that are nevertheless able to produce strong revenues and profit growth, and that's why tech stocks have been the market's biggest stars for years.

On Wednesday, they once again helped pace the market.

Besides Apple's 1.4 per cent gain, Nvidia jumped 6.1 per cent and Advanced Micro Devices rose 3.5 per cent.

As a group, tech stocks in the S&P 500 climbed 1.1 per cent for the second-largest gain among the 11 sectors that make up the index.

Tech stocks in the S&P 500 have surged 47.7 per cent over the last 12 months, nearly double the rise for any of the index's other sectors.

Energy stocks in the S&P 500 jumped 1.3 per cent.

They climbed with the price of crude oil, while Concho Resources leaped 7.6 per cent for the biggest gain in the S&P 500 after reporting stronger quarterly results than analysts expected.

The sector has been struggling as worries about weaker demand have weighed on the price of oil.

Energy stocks have lost 15.5 per cent over the last 12 months, the only sector in the S&P 500 to be down over that time.

Energy: Benchmark crude oil added 34 cents to USD 53.83 a barrel in electronic trading on the New York Mercantile Exchange. It jumped USD 1.20 to USD 53.49 overnight.

Brent crude oil, the international standard, rose 26 cents to USD 59.38 a barrel.

Currencies: The dollar edged up to 111.51 Japanese yen from 110.34 yen on Wednesday. The euro weakened slightly to USD 1.0791 from USD 1.0805.

Also Read

First Published: Feb 20 2020 | 1:24 PM IST

Next Story