Shares advanced in Asia on Wednesday (March 25) after the Dow Jones Industrial Average surged to its best day since 1933 as Congress and the White House neared a deal on injecting nearly $2 trillion of aid into an economy ravaged by the coronavirus.
Japan's Nikkei 225 index jumped 5.3%, while Hong Kong added 3% and Sydney climbed 3.6%. Markets across Asia were all up more than 2%.
Tokyo share prices were boosted by the decision to postpone the 2020 Olympics to July 2021 in view of the coronavirus pandemic, which has brought travel almost to a standstill and is leaving many millions of people ordered to stay home to help contain the outbreaks.
U.S. futures edged lower, however, raising uncertainty over what the day may bring. The future for the Dow down 1.1% at 20,387.00 and the contract for the S&P 500 falling 1.6% to 2,399.80.
That followed a stunning 11.4% surge in the Dow overnight. The more closely followed S&P 500 index leaped 9.4% as a wave of buying around the world interrupted what has been a brutal month of nearly nonstop selling.
Economists and investors expect to see some dire measures of the impact of the virus in coming days and weeks, and few believe markets have hit bottom. Rallies nearly as big as this have punctuated the last few weeks, and none lasted more than a day.
A breakthrough in the U.S. Congress on the stimulus package would be another welcome boost to sentiment. Both Democrats and Republicans said Tuesday they were close to agreeing on a massive economic rescue package, which will include payments to U.S. households and aid for small businesses and the travel industry, among other things. A vote in the Senate could come Wednesday.
Now that the Federal Reserve has done nearly all it can to sustain markets, pressure is on Congress to act. Ultimately, investors say they need to see the number of new infections peak before markets can find a floor. The increasing spread is forcing companies to park airplanes, shut hotels and close restaurants to dine-in customers.
“It’s sort of like, keep the patient alive in the emergency room so you can provide some treatment options,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
The Dow rose 2,112.98 points, its biggest point gain in history, to 20,704.91. The S&P 500, which is much more important to most 401(k) accounts, rose 209.93, or 9.4%, to 2,447.33 for its third-biggest percentage gain since World War II. The Nasdaq composite jumped 557.18 points, or 8.1%, to 7,417.86.
By midday Wednesday in Asia, Tokyo's Nikkei was at 19,044.59, while the Hang Seng rose to 23,120.83. South Korea's Kospi gained 4.2% to 1,677.91 and the S&P/ASX 200 picked up 2% to 4,830.60. Taiwan's benchmark jumped 4.3%. Shares were also higher in Southeast Asia.
U.S. crude oil gained 77 cents to $24.78 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international pricing standard, added 73 cents to $30.47 per barrel.
In currency trading, the U.S. dollar was at 111.00 Japanese yen, down from 111.22 yen late Tuesday. The euro rose to $1.0815 from $1.0790.
Earlier share rebounds have evaporated. Since stocks began selling off on Feb. 20, the S&P 500 has had six days where it’s risen, and all but one of them were big gains of more than 4%. Afterward, stocks fell an average of 5% the next day.
The VIX index, a proxy for equity market volatility, remains relatively high, “suggesting that underlying risk sentiment may stay cautious as investors remain wary on the pace of the infection spread, with total confirmed Covid-19 cases exceeding 400,000 globally," Mizuho Bank said in a commentary.
President Donald Trump said Tuesday during a Fox News virtual town hall that he hopes to “open up ” the economy by Easter. Analysts said the pronouncement wasn't a contributor to the day's huge rally, which was mostly due to the stimulus hopes.
“Given the enormity of the package, it will most certainly be well initially well-received as it should be sufficient to avoid buttress ‘Main street' from falling into worst-case, depression type scenarios, especially with the Fed prepared to monetize all the US government's debt," Stephen Innes of AxiCorp. said in a commentary.
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. Those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems. Recovery could take six weeks in such cases.
Governments and central banks in other countries around the world are unveiling unprecedented levels of support for their economies in an attempt to limit the scale of the upcoming virus-related slump.
Germany, a bastion of budgetary discipline, also approved a big fiscal boost. Thailand announced $3.6 billion in stimulus on Tuesday as its prime minister announced a state of emergency likely to bring stronger restrictions on business and travel.
Measures of the shock to the world economy from the pandemic are just beginning to show the extent of its toll on business and livelihoods. In the United States, a preliminary reading on business activity in March showed the steepest contraction on record, going back to 2009. Reports were also gloomy for Europe.
On Thursday, economists expect a report to show the number of Americans applying for jobless claims easily set a record last week. Some say the number could be way beyond 1 million, amid a wave of layoffs, topping the prior record of 695,000 set in 1982.
AP Business Writers Damian J. Troise, Alex Veiga and Stan Choe contributed.