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The benchmark indices posted biggest gains in over a decade on Wednesday
The benchmark indices posted biggest gains in over a decade on Wednesday

Markets seen choppy as investors await fiscal stimulus; Asian stocks cautious

  • Asian stock markets made a cautious start following two days of rallies, as investors await the passage and details of a $2 trillion package
  • Japan's Nikkei fell 2.2%. Hong Kong futures were 1% higher and China A50 futures were up 0.2%

Indian stock markets are likely to stay volatile in Thursday’s trade. The benchmark indices posted biggest gains in over a decade in the previous trading session, even as the country went into a 21-day lockdown to curb the spread of coronarivus (COVID-19).

Asian stock markets made a cautious start following two days of rallies, as investors await the passage and details of a $2 trillion stimulus package in the United States to combat the economic fallout from the COVID-19.

Senate leaders hope to vote on the plan later on Wednesday in Washington, but it still faces criticism. The bill includes a $500 billion fund to help hard-hit industries and a comparable amount for payments up to $3,000 to millions of US families.

It cannot come soon enough, with potentially enormous weekly US initial jobless claims to appear in data due at 1230 GMT.

Australia's S&P/ASX 200 index rose 1.5% in early trade - its third positive start in as many sessions, but also its most muted. Japan's Nikkei fell 2.2%. Hong Kong futures were 1% higher and China A50 futures were up 0.2%. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%.

In perhaps an early sign of the fragile mood, the risk-sensitive Australian dollar dropped 1% and the safe-haven Japanese yen rose in morning trade.

US stock futures rose 1%, following the first back-to-back session rises on Wall Street in over a month.

The Dow Jones Industrial Average rose 2.4% and the S&P 500 1.2%, while the Nasdaq Composite dropped half a percent following a Nikkei report that Apple was weighing a delay in the launch of its 5G iPhone.

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the US government spends annually.

But it also comes against a backdrop of bad news as the coronavirus spreads and as jobless claims are set to soar, with both expected to test the nascent bounce in markets this week.

Back home, manufacturers struggled to distribute essential products to many parts of India on the first day of 21-day lockdown to stem the spread of COVID-19, a move that drew praise from the World Health Organisation but left local authorities confused about its enforcement.

Pegging the cost of the COVID-19 lockdown at USD 120 billion (approximately 9 lakh crore) or 4% of the GDP, Barclays on Wednesday sharply cut their growth estimates and stressed on the need to announce an economic package.

Trepidation seemed to put a halt on the US dollar's recent softness in currency markets, with the dollar ahead 1% against the Antipodean currencies and up 0.6% against the pound. It slipped 0.3% to 110.85 yen.

US crude slipped 1.5% to $24.11 per barrel and gold steadied at $1,608.14 per ounce.

(Reuters contributed to the story)

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