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Asian shares turn cautious, oil rebounds in choppy trade

Published 04/07/2020, 07:58 PM
Updated 04/07/2020, 11:35 PM
© Reuters. People wearing protective face masks look at a stock quotation board outside a brokerage in Tokyo

© Reuters. People wearing protective face masks look at a stock quotation board outside a brokerage in Tokyo

By Wayne Cole

SYDNEY (Reuters) - Asian stocks stepped back on Wednesday after two sessions of sharp gains as investors tempered their optimism about the coronavirus while death tolls were still mounting across the globe.

While the number of COVID-19 hospitalizations seemed to be levelling off in New York state, deaths across the United States jumped by a record 1,800.

Mainland China's new coronavirus cases also doubled in 24 hours due to infected overseas travellers.

Not helping sentiment were wild swings in the oil market, where prices rebounded in Asia after sliding on Tuesday to leave traders feeling dizzy. [O/R]

U.S. crude futures jumped 5.5% to $24.93 a barrel, having shed 9.4% the session before, while Brent crude added 75 cents to $32.62.

The erratic action spilled over into equities with MSCI's broadest index of Asia-Pacific shares outside Japan losing 0.7%.

Japan's Nikkei went the other way and added 0.4%, while Shanghai blue chips lost 0.6%.

E-Mini futures for the S&P 500 wobbled either side of flat, while EUROSTOXX 50 futures dropped 1.1%.

"There is reason to be cautious as this looked to be a relief rally ahead of next week's start of Q1 earning season and before data reveals the depth of the virus impact," said analysts at JPMorgan (NYSE:JPM) in a note.

"Data shows the recent move higher has been accompanied by short covering and de-risking rather than active risk taking on the long side."

The S&P 500 had ended Tuesday down 0.16%, having been up as much as 3.5% at one stage. The Nasdaq dropped 0.33% and the Dow 0.12%.

After U.S. stock markets closed, President Donald Trump said the United States may be getting to the top of the coronavirus curve.

The Trump administration asked Congress for an additional $250 billion in emergency economic aid for small U.S. businesses reeling from the pandemic.

"While the virus' 'curve is flattening', the economic effects of the corona crisis will linger for years in our view," Commonwealth Bank of Australia economist Joseph Capurso said in a note.

"Economies will take time to re‑open, some businesses will not re‑open, and unemployment will take years to return to levels reported at the end of 2019."

Ratings agency S&P Global on Wednesday warned the cost of combating the virus would weigh heavily on Australia's finances and changed the outlook for the country's rating to negative.

That knocked the Aussie dollar down 0.6% to $0.6130 and hit risk sentiment generally. The U.S. dollar eased 0.1% on the safe-haven yen to 108.80, while the euro dipped 0.2% to $1.0865.

Against a basket of currencies, the dollar edged up 0.2% to 100.170.

© Reuters. People wearing protective face masks look at a stock quotation board outside a brokerage in Tokyo

Gold prices eased back to $1,645, after touching a 3-1/2-week high on Tuesday at $1,671.

Latest comments

I think Indian traders are over enthusiastic after a streak of downward trend. Many traders who are painfully looking their shares plummeting happy to run with what they get in this pull back.
Im new at all this. I'd like to buy stock in the Asian retailer "I.T. Limited" but can't find it anywhere. I see on the charts when I google it that its listed as HKD but when I put that in on my etrade app it doesn't show up. Any help would be appreciated
Ita in the hong kong exchange. They probably dont have it.
nevermind
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