Asian markets mixed as rally stalls

The further easing of lockdown measures and signs that economies could be past the worst of the coronavirus crisis kept investors upbeat Thursday but markets fluctuated on profit-taking and concerns over China-US tensions.

With more and more countries slowly reopening their battered economies after months of shutdowns and the backing of trillions of dollars in stimulus and central bank support, global markets have been on a roll for weeks.

And in a sign of the optimism on trading floors, the Nasdaq climbed to within spitting distance of its all-time high, while the S&P is less than 10 percent short of its own record.

With bars, cafes and popular attractions back up and running across Europe, several countries including Germany, Italy, Austria and Belgium began easing border restrictions, fanning hopes for the shattered tourism sector as summer gets under way.

Germany also said it will pump 130 billion euros ($146 billion) into a stimulus package to kick-start the region’s biggest economy, and later in the day, the European Central Bank is expected to boost its 750-billion-euro bond-buying programme by a further 500 billion euros.

Wednesday also saw the release of US data showing another 2.76 million private jobs were lost in May, which was well below the nine million expected by economists, indicating there is light at the end of the tunnel.

“Global equity markets have remained in a buoyant mood fuelled by the prospect of economies reopening while data releases have supported the notion that the worst of the economic downturn could be behind us,” said Rodrigo Catril of National Australia Bank.

In early trade, Hong Kong dipped 0.2 percent, having rallied around six percent over the previous three days.

Traders were also keeping an eye on the streets of the city on the anniversary of the Tiananmen Square crackdown, which usually draws huge crowds but has been banned this year over virus concerns.

Tokyo rose 0.1 percent by the break, Sydney added 0.6 percent and there were also gains in Wellington, Taipei and Jakarta, with Manila more than two percent up. Seoul and Singapore dipped 0.1 percent.

– China to allow US flights –

“Investors continue to cling to optimism for a speedy economic recovery from the pandemic and in anticipation of more stimulus from the EU,” said AxiCorp analyst Stephen Innes.

“With economies emerging from lockdown, it seems markets are increasingly confident that the incredulous liquidity injections from central banks and governments alike will continue to flow into risk assets.”

Still, China-US tensions remain on the table, and on Wednesday Washington ordered the suspension of all flights by Chinese airlines into and out of the United States.

But China on Thursday said it would allow foreign airlines currently blocked from operating in the country to resume limited flights from June 8, lifting a de facto ban on US carriers.

Despite the continued niggling between the world’s two superpowers, Ken Berman of Gorilla Trades said: “The two sides continue to stick to the ‘phase one’ trade deal, and analysts think that until the two sides… start imposing direct trade measures, the risk to the still-fragile global economy remains low.”

Oil markets slipped back after climbing to three-month highs on hopes for an extension to a massive output cut by major producers led by Saudi Arabia and Russia, who just a few months ago were locked in a market-crashing price war.

Innes added: “The simple fact is that Saudi Arabia and Russia are currently singing from the same song sheet while demonstrating a continued commitment to rebalancing the market and supporting the oil price.

“The critical risk from here will be how US shale producers respond to the rebound in oil prices.”

– Key figures around 0300 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 22,631.01 (break)

Hong Kong – Hang Seng: DOWN 0.2 percent at 24,277.86

Shanghai – Composite: DOWN 0.1 percent at 2,919.70

West Texas Intermediate: DOWN 1.9 percent at $36.60 per barrel

Brent North Sea crude: DOWN 1.2 percent at $39.32 per barrel

Euro/dollar: DOWN at $1.1219 from $1.1232 at 2100 GMT

Dollar/yen: DOWN at 108.90 yen from 108.92 yen

Pound/dollar: DOWN at $1.2538 from $1.2573

Euro/pound: UP at 89.47 pence from 89.33 pence

New York – Dow: UP 2.1 percent at 26,269.89 (close)

London – FTSE 100: UP 2.6 percent at 6,382.41 (close)