Bank of America just raised its EUR/USD forecast
* MSCI ACWI builds on biggest gains since 2008 financial
crisis
* Gold retain gains after big jump
* Dollar slides as funding squeeze eases a little
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, March 25 (Reuters) - Asian shares extended their
rally on Wednesday in the wake of Wall Street's massive rebound
as the U.S. Congress appeared closer to passing a $2 trillion
stimulus package to mitigate the economic blow from the
coronavirus pandemic.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 1.7% with Australian shares jumping 3.4%
and South Korean shares .KS11 gaining 3.5%. Japan's Nikkei
.N225 surged 4.8%.
"Japanese shares have been bolstered by aggressive buying
from the Bank of Japan and pension money this week. That has
prompted hedge funds to cover their short positions," said
Norihiro Fujito, chief investment strategist at Mitsubishi UFJ
Morgan Stanley Securities.
On Tuesday, MSCI's gauge of stocks across the globe
.MIWD00000PUS rallied 8.39%, the largest single-day gain since
the wild swings seen during the height of the global financial
crisis in October 2008. It rose another 0.8% in Asia on
Wednesday.
On Wall Street, the Dow Jones Industrial Average .DJI
soared 11.37%, its biggest one-day percentage gain since 1933.
Yet, much of the large gains in stock markets pale in
comparison with the brutal selloff of the past few weeks as
investors braced for a deep global recession in the wake of
sweeping lockdowns in many countries.
U.S. S&P500 is still down almost 28% from its record peak
hit just over a month ago. Wall Street futures EScv1 were down
1.1% in early Asian trade.
"Many analysts have recently put out dire economic
forecasts, like annualised rate of 20% fall in U.S. GDP next
quarter. Europe and Japan should also see double-digit
contractions," said Nobuhiko Kuramochi, chief strategist at
Mizuho Securities.
"I suspect the outlooks have sunk in among market players
already and that the bear market has run about 80% of its course
for now."
Senior Democrats and Republicans in the divided U.S.
Congress said on Tuesday they were close to a deal on a $2
trillion stimulus package to limit the economic damage from
coronavirus pandemic. But it was unclear when they would be
ready to vote on a bill. Investor fears about a sharp economic downturn appear to be
easing somewhat after the U.S. Federal Reserve's offer of
unlimited bond-buying and programmes to buy corporate debt.
"Companies will see their revenues sink and indebted firms
will have trouble securing cash, so governments are making the
right responses," said Akira Takei, senior fund manager at Asset
Management One.
"The question is, while those responses are necessary in the
near term, what if this continues? You can't keep helping
companies that continue to make losses. The longer this drags
on, the more likely we will need to adjust to a new normal."
The biggest uncertainty is on how countries can slow the
pandemic and how quickly they can lift various curbs on economic
activity.
U.S. President Donald Trump pressed his case for a
re-opening of the U.S. economy by mid-April.
But that met immediate scepticism given the rise of
infections in the United States is now among the highest in the
world, with the total cases reaching more than 50,000, doubling
in less than 3 days recently. In particular, its financial hub of New York City suffered
another quick and brutal rise in the number of infections to
around 15,000, raising worries about shortage of hospital beds.
In the currency market, the dollar has slipped as a
greenback liquidity crunch loosened slightly.
The euro traded at $1.0808 EUR= up 0.15% after four
straight days of gains.
The dollar dropped 0.3% against the yen to 110.85
JPY= , off a one-month high of 111.715 touched the previous
day.
Gold ticked up 0.3% to $1,614.5 per ounce XAU= after
having soared almost 5%, its biggest gains since 2008, on
Tuesday. It was in part helped by concerns lockdowns in major
producer South Africa could disrupt supply.
Oil prices bounced back as hopes for U.S. stimulus offset
fears of falling global demand.
India, the world's third largest oil consumer, ordered its
1.3 billion residents to stay home for three weeks, the latest
big fuel user to announce restrictions on social movement, which
have destroyed demand for gasoline and jet fuel worldwide.
The market remained pressured by a flood of supply after
Saudi Arabia started a price war earlier this month, a move that
dealt a crushing blow to markets already reeling from the
pandemic.
U.S crude futures CLc1 rose 4.5% to $25.10 per barrel.
That is up about $5.5, or almost 26%, from their 18-year
intraday low of $19.46 touched on Friday. Still on the month,
the market is down 44%.
(Editing by Sam Holmes & Shri Navaratnam)