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Japan shares scale 10-week peak, S&P 500 up sharply

Stock MarketsMay 26, 2020 02:25AM ET
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© Reuters. A man wearing a protective face mask walks past a screen showing Nikkei index in Tokyo

By Wayne Cole

SYDNEY (Reuters) - Asian shares forged ahead on Tuesday while U.S. stock futures breached a major chart barrier as investors brushed past Sino-U.S. trade tensions to more stimulus in China and a re-opening world economy.

Japan's Nikkei (N225) took the lead with a rise of 1.7% to its highest since early March when the economic impact of the coronavirus was just becoming clear.

MSCI (NYSE:MSCI)'s broadest index of Asia-Pacific shares outside Japan advanced 1.6%, while South Korea (KS11) rose 1.5%.

E-Mini futures for the S&P 500 climbed 2% to clear the 3,000 chart level. EUROSTOXX 50 futures added 0.98% and FTSE futures 2.2%.

Chinese blue chips (CSI300) firmed 0.8% after the country's central bank said it would strengthen economic policy and continue to push to lower interest rates on loans.

While largely reiterations of past comments, they helped offset the war of words between Washington and Beijing over trade, the coronavirus and China's proposals for stricter security laws in Hong Kong.

"U.S.-China tensions continue to simmer in the background, but equity investors appear more interested on the prospect of economies reopening around the globe," said Rodrigo Catril, a senior FX strategist at NAB.

"On this score, Japan ended its nationwide state of emergency, Spaniards have returned to bars in Madrid wearing masks and England will reopen some businesses on June 1."

There were reports Tuesday that Germany wants to end a travel warning for tourist trips to 31 European countries from June 15 if the coronavirus situation allows.

Bond investors suspect economies will still need massive amounts of central bank support long after they reopen and that is keeping yields low even as governments borrow much more.

Yields on U.S. 10-year notes were trading at 0.67% having recovered from a blip up to 0.68% last week when the market absorbed a tidal wave of new issuance.

The decline in U.S. yields might have been a burden for the dollar but with rates everywhere near or less than zero, major currencies have been holding to tight ranges.

The dollar was a fraction firmer on the yen on Monday at 107.83 but well within the 105.97 to 108.08 band that has lasted since the start of May.

The euro was a shade firmer at $1.0916 (EUR=), having spent the month so far wandering between $1.0765 and $1.1017.

Against a basket of currencies the dollar was 0.2% lower at 99.620 (=USD), but still sandwiched between support at 99.001 and resistance around 100.560.

Analysts at CBA felt the dollar could break higher should China-U.S. tensions actually threaten their trade deal.

"Although not our central scenario, if the U.S. or China were to withdraw from the Phase One deal, USD would sharply appreciate while CNH, AUD and NZD would decline," they wrote in a note to clients.

In commodity markets, gold edged up 0.2% to $1,733 an ounce.

Oil prices were supported by falling supplies as OPEC cut production and the number of U.S. and Canadian rigs dropped to record lows for the third week running.

Brent crude futures rose 71 cents to $36.24 a barrel, while U.S. crude gained $1.14 to $34.39.

Japan shares scale 10-week peak, S&P 500 up sharply
 

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Comments (13)
yusof jaafar
Yusof May 26, 2020 7:39AM ET
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Dongwoo Huh, The market is always right! what is not right is the individual investor who wants the market to follow their wishes.
Dongwoo Huh
Dongwoo Huh May 26, 2020 3:53AM ET
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Interesting... Economy is in recession... Business going bankrupt... Government is giving out money left and right... COVID-19 is getting worse and yet... stock markets are peak... something doesnt seem right
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Evgeny Zakharov
Evgeny Zakharov May 26, 2020 3:53AM ET
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“to cope”
Tre Hsi
Tre Hsi May 26, 2020 3:53AM ET
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Evgeny Zakharov  why would you need to compare the deaths from Cancer or Stroke or Car accidents to Covid?  they are not infecteous dieseases
Bulls MakeMore
Bulls MakeMore May 26, 2020 3:53AM ET
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The U.S. stock market is forward-looking by 6+ months, that is the reason.
Bulls MakeMore
Bulls MakeMore May 26, 2020 3:53AM ET
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...and the U.S. is already reopening, slowly but surely. The future looks brighter than the first 5 months of 2020, so the market looks brighter too. Things are getting better, that's what the market is looking at.
Evgeny Zakharov
Evgeny Zakharov May 26, 2020 3:53AM ET
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Tre Hsi first of all, I said “all” and do you think those casulties are not worth mentioning? May markets have to panic because of them too
Michael anthony
Michael anthony May 26, 2020 3:51AM ET
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Where are those internet amateurs praying for a market crash? Wait till DJI climbs 27,500. Too much internet news confuses a lot of Amateurs.
Evgeny Zakharov
Evgeny Zakharov May 26, 2020 3:51AM ET
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they’re crying among that dead weight of cash they have
Adel Youssef
Adel Youssef May 26, 2020 2:37AM ET
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Thursday GDP news will be macthign support level 9750 for Nasdaq , huge sell off end of week till Fib level 8800
Adamo Nals
Adamo Nals May 26, 2020 2:04AM ET
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Just wait for the major massive correction. This disconnection is beyond anything I’ve seen in 35 years. It’s gonna be a hard fast fall when it happens
Michael anthony
Michael anthony May 26, 2020 2:04AM ET
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Keep waiting. Hope you dont wake up in another world like captain America
Evgeny Zakharov
Evgeny Zakharov May 26, 2020 2:04AM ET
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Michael anthony I’d add “keep repeating” and “keep dreaming” to him
sahil singh
sahil singh May 26, 2020 2:00AM ET
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markets will go up untill everything is in hands of retailers. if not they will continue to go up..
Midway Eholdings
Midway Eholdings May 26, 2020 12:44AM ET
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Bears and the virus both not doing the damage predicted
Edward Chong
Edward Chong May 26, 2020 12:44AM ET
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cos too much shorts. dont challenge the mkt.
Daniel Lule
Daniel Lule May 26, 2020 12:43AM ET
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Central banks are the Deus ex machina in this fairy tale
Vorlon Firstone
Vorlon Firstone May 26, 2020 12:43AM ET
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wow, check out this big brain, somebody knows latin
CT SomyedHengSuay
CT SomyedHengSuay May 25, 2020 11:41PM ET
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S&P 500 futures will go to 3100 because...investors looked past...Sino-U.S. trade tensions and looked past...the effects of the corona virus and looked past...all risks and obsession with greed , Amen !!!
Michael King
Michael King May 25, 2020 11:20PM ET
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When the rally start from Japan, this is a  terrible sign of another crash. Japan is the only country who produced meat from captured British solders to feed their own solders during the world war II. It is also the country who volunteer their own girls to American solders to change for peace. This is the country who always goes crazy. Very likely the second eruption of the COVID is coming at the worldwide reopen. This is also why institutes are screaming for retail investors to buy so they can dump their huge shares in good prices.
ivan preg
ivan preg May 25, 2020 11:20PM ET
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Have u ever been to Japan or spoke to any Japanese? Speaking like a pro.......
Vorlon Firstone
Vorlon Firstone May 25, 2020 11:20PM ET
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what’s “solders”?
Evgeny Zakharov
Evgeny Zakharov May 25, 2020 11:20PM ET
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this is the country which produces the most reliable cars on this planet, too... and much other stuff (like optics, etc.)
Tre Hsi
Tre Hsi May 25, 2020 11:20PM ET
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"Japan is the only country who produced meat from captured British solders to feed their own solders during the world war II. It is also the country who volunteer their own girls to American solders to change for peace. This is the country who always goes crazy."  ---  I don't think Japan is the one that sounds crazy, listen to yourself dude.....
Gamer Turtle
GamerTurtle May 25, 2020 11:19PM ET
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stock market officially no longer need employees or paying customers to function. Fact is I could be walking to the bathroom and that's a sign of a bullish movement. lol
mel o d
mel o d May 25, 2020 11:19PM ET
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Lmao so tru. I'm just here to read comments at this point.
Gamer Turtle
GamerTurtle May 25, 2020 11:19PM ET
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mel o d  same. lol, economy and stock market is 2 different reality lately, it's pointless to read, but the comment section is still entertaining most of the time.
Habanero Peppers
Habanero Peppers May 25, 2020 11:12PM ET
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Stonks
Tricky Dick
TrickyDick May 25, 2020 8:48PM ET
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German business morale is up, so that looks past the real problems?
Omi Samson
Omi Samson May 25, 2020 8:48PM ET
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Nk bag holder
Nk bag holder May 25, 2020 8:48PM ET
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They are giving hopeful news to make the retail take over their awful portfolios
Vincent TT
Vincent TT May 25, 2020 8:48PM ET
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Nothing to see here. Everyone is happy.
Ronald Warren
Ronald Warren May 25, 2020 8:48PM ET
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Just a bunch of fraudulent garbage. Japan and Germany in recession. U.S. futures took a dump late afternoon today. Slipped into the red. In a flash, AI systems kicked in with a pump. The Dow jumped 200 points. Other indices followed suit. I just can't bring myself to go long when the market should be down.
Alejandro Rosario
Alejandro Rosario May 25, 2020 8:48PM ET
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Yes if does
 
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