Asian stocks rose on Friday as investors wagered policymakers will roll out more stimulus measures to combat the coronavirus pandemic after U.S. unemployment filings surged to a record.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, while Japan’s Nikkei rose 3.88 percent, capping its biggest weekly gain on record. Australian shares gave up gains to fall 5.3 percent after a strong week.
E-Mini futures for the S&P 500 reversed course and fell 0.88 percent following three consecutive days of gains in the S&P 500 on Wall Street.
Pan-regional Euro Stoxx 50 futures were down 0.51 percent, German DAX futures fell 0.61 percent, and FTSE futures were down 1.31 percent, suggesting gains in Asian shares will not carry over into Europe.
The dollar fell against major currencies as central banks’ repeated steps to solve a dollar shortage in funding markets started to gain traction.
The U.S. House of Representatives is expected to pass a US$2.2 trillion stimulus package that will flood the world’s largest economy with money to stem the damage caused by the pandemic.
The U.S. Federal Reserve has already slashed rates to zero and launched quantitative easing. The Fed will also take the unprecedented step of offering a direct backstop for corporate loans.
The United States is now the country with the most coronavirus cases, surpassing even China, where the flu-like illness first emerged late last year. Policymakers may need to offer more stimulus as the virus slams the brakes on economic activity and increases healthcare spending.
“I’m not sure what measures are left, but the reaction in stocks shows some people hoping for more stimulus thought the market was a little oversold,” said Yukio Ishizuki, FX strategist at Daiwa Securities in Tokyo.
“Currencies tell a different story. The dollar is the lead actor. The mad rush to buy dollars due to liquidity concerns is starting to fade.”
The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the virus pandemic ground the country to a sudden halt, data showed on Thursday.
The jobless blowout was announced shortly after Fed Chairman Jerome Powell said the United States “may well be in recession”, an unusual acknowledgement by a Fed chair that the economy may be contracting even before data confirms it.