Sydney: Asian stock markets climbed to a seven-month high on Wednesday, following the S&P 500 index and hitting a record high due to expanding policy stimulus measures aimed at alleviating the economic blow of the coronavirus pandemic.
MSCI’s broadest Asia Pacific stock index outside of Japan rose 0.3%, rising for the third consecutive day to 570.80 points, the highest level since the end of January.
cJapan’s Nikkei index also rose, although the Chinese stock market began to weaken, the blue chip CSI300 index fell 0.7%.
Overnight, due to strong sales growth from major US retailers such as Wal-Mart, Cole and Home Depot, both the S&P 500 and the Nasdaq Composite Index set records shortly after the opening.
The closely watched Standard & Poor’s 500 Index hit a historical peak set in February. Just before the outbreak of the COVID-19 pandemic, the benchmark index fell to a low on March 23. Since then, the index has soared by about 55%.
At just 126 days, that “is the fastest bear market recovery ever,” said Tapas Strickland, economist at Melbourne-based National Australia Bank.
Nasdaq set its 18th record high since the beginning of June.
The Federal Reserve has intervened in financial markets to maintain liquidity during the coronavirus pandemic. It has pushed risky assets to record highs and reduced demand for safe-haven assets, weakening the U.S. dollar.
Data show that the US housing construction industry reached its highest growth rate in nearly four years in July, which also boosted market optimism, indicating that the housing sector is becoming one of the few strong sectors.
NAB’s Strickland pointed out that, in addition, the Speaker of the House of Representatives, Nancy Pelosi (Nancy Pelosi), rekindled hopes of implementing an interim fiscal plan overnight.
Strickland said that the market is also paying close attention to the minutes of the Fed’s meeting later in the day, “to show that the Fed will announce any hints about forward-looking guidance in September.”
The Fed has lowered interest rates to close to zero in order to support business through the pandemic, causing the dollar to fall to a 27-month low.
The dollar index was flat at 92.23 from above 100 in March. The safe-haven currency yen exchange rate against the US dollar rose slightly to 107.51.
The risk-sensitive Australian dollar traded near $0.7255, while the kiwi last bought $0.6611.
Gold flirted with key charted resistance of $2,000 an ounce to be last at $1,998.
U.S. gold futures were a shade weaker at $2,005.2.
Oil prices skidded as concerns grew that U.S. fuel demand may not recover quickly. [O/R]
Brent crude down 26 cents at 45.20 and U.S. crude off 18 cents at $42.71.