Asian shares are recovering and hope for extra stimulus will offset virus worries

© Reuters. A SGX sign is pictured on the Singapore Stock Exchange

By Hideyuki Sano

TOKYO (Reuters) – Asian stocks posted gains and US stock futures rebounded on Friday as hopes of more government spending around the world suppressed concerns over rising new coronavirus cases and worsening tensions between Washington and Beijing.

The broadest MSCI Asia Pacific stocks outside of Japan gained 0.5%, reducing a quarter of its losses the previous day from 2%, while remaining virtually unchanged.

In China, the CSI300 index rose 1.1%, pushing back part of the 4.8% decline on Thursday and shaking the news that Washington is considering banning all members of the Chinese Communist Party from traveling to the United States.

Market observers said investors are counting on US policymakers to take more stimulus measures as the world's largest economy struggles to contain the epidemic. Some existing business support programs expire within weeks.

"The sustainability of this recovery will depend to a large extent on whether another tax agreement is reached," said analysts at ANZ Bank in Sydney in a statement.

US Congress is expected to begin debating such a package next week as several countries in the south and west of the country take new measures to contain the virus.

"One might think that such a sharp rise in infections would normally lead to a drop in share prices, but at the moment this has been offset by high hopes for vaccines," said Tomo Kinoshita, global market strategist at Invesco in Tokyo.

"But we now see a higher risk of a market correction as the improvement in hard economic data we've seen in the past few months is likely to stall," he said.

While retail sales for June released on Thursday exceeded market expectations, real-time retail pedestrian traffic and employee work hours and shifts have flattened after steady growth since April.

The US job market remained in poor shape. In the last week of June, 32 million people received unemployment control across all programs, compared to the previous week, but still the second highest number in existence.

GRAPHICS: US labor market

Meanwhile, US stock futures in Asia rose 0.2%, making up for Thursday's losses when the S & P500 fell 0.34% as investors gained rallies in high-tech stocks ahead of profits in the Posted later this month.

Netflix (NASDAQ 🙂 slipped 9.0% after the bell to kick off its technology sector results as subscriber growth was slower than Wall Street's high expectations and forecast a further slowdown in the pace of expansion this quarter.

In currencies, the euro was below the four-week high it hit earlier this week, but remained firm when the heads of state and government of the European Union met on Friday to overcome the differences over a proposed stimulus package to stimulate economic growth suppressed by the corona virus.

At a summit starting later in the day – their first face-to-face talks since the pandemic – the EU budget 2021-27 and a new € 750 billion ($ 854 billion) redevelopment fund are on the table for a big step tax integration in Europe.

While the Dutch opposition and the threat of a Hungarian veto weigh on the chances of a deal, investors hope that it is more about when a deal is made than when a deal is made.

"Whether they will come to an agreement today or later this month or later this year is unclear. But there are a lot of hopes that you saw at the start of euro trading," said Masaru Ishibashi, joint general manager of trading at Sumitomo Mitsui (NYSE 🙂 Bank.

The euro remained unchanged at $ 1.1386 on that day.

The yen remained unchanged at $ 107.50 per dollar.

Commodities trading saw little change in oil prices, up 0.25% to $ 43.26 a barrel and 0.22% to $ 40.84.

($ 1 = 0.8783 euros)

Chart: Asian stock markets

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