NEW YORK CITY: The global stock rally powered by investor optimism for a speedy economic recovery from the pandemic paused Thursday. The dollar recouped some of the losses that pushed it to the weakest since early March.
Equities in Japan erased gains of as much as 1 per cent. South Korea and Australia pared advances, while Hong Kong and Chinese stocks turned lower, Bloomberg reported.
US equity futures slipped after the Nasdaq 100 earlier briefly surpassed its February closing record and banks led the S&P 500 Index to a three-month high. Treasuries retained declines as investors turned away from havens after US private payrolls showed fewer job losses than forecast in May.
Australian 10-year yields rose back above 1% for the first time since March.
The reopening of global economies has turned into a tailwind for stocks, along with unprecedented levels of stimulus across the world. Wednesday’s advance was driven by financials, autos and durable goods manufacturers, indicating the rally is broadening out. Big tech shares lagged.
“People are seeing the damage to the economy abate and investors now believe there is light at the end of the tunnel,” Susan Schmidt, a portfolio manager at Aviva Investors Americas LLC, said on Bloomberg TV.
“We will continue to see support for the stock market.”
Next up comes the European Central Bank, which is expected to boost its rescue program Thursday. Chancellor Angela Merkel’s coalition earlier agreed on a sweeping 130 billion-euro ($146 billion) stimulus package designed to spur short-term consumer spending and get businesses investing again. Meantime, tensions continue to simmer with the US barring Chinese airlines in retaliation for Beijing ignoring the requests of American carriers to resume flights to China that had been suspended for the pandemic.
Elsewhere, oil edged lower after trading close to its at highest level since early March amid optimism that OPEC+ economies will rebalance the market.
Here are some key events coming up:
- The European Central Bank is expected to top up its rescue program with an additional 500 billion euros of asset purchases at a meeting on Thursday. Anything less than an expansion would be a big shock, Bloomberg Economics said.
- The US labor market report on Friday will probably show American unemployment soared to 19.5 per cent in May, the highest since the 1930s.
These are the main moves in markets:
- Futures on the S&P 500 Index slid 0.3 per cent as of 12:40 pm in Tokyo. The gauge rose 1.4 per cent on Wednesday.
- Japan’s Topix index slid 0.2 per cent.
- Hong Kong’s Hang Seng fell 0.2 per cent.
- The Shanghai Composite dipped 0.2 per cent.
- South Korea’s Kospi index rose 0.2 per cent.
- Australia’s S&P/ASX 200 Index added 0.1 per cent.
- Euro Stoxx 50 futures dipped 0.5 per cent.
- The yen was little changed at 108.89 per dollar.
- The offshore yuan held at 7.1282 per dollar.
- The euro bought $1.1218, down 0.1 per cent.
- The Bloomberg Dollar Spot Index edged up 0.1 per cent, though it remains down 1.1 per cent this week.
- The yield on 10-year Treasuries ticked lower to 0.74 per cent.
- Australia’s 10-year yield rose three basis points to 1.00 per cent.
- West Texas Intermediate crude dipped 2.2 per cent to $36.47 a barrel.
- Gold was up 0.2 per cent at $1,703.54 an ounce after tumbling 1.6 per cent on Wednesday.