Asia report: Markets surge as US lawmakers agree huge stimulus

Markets in Asia were higher across the board on Wednesday, led by stocks in Japan, as investors reacted to the news that lawmakers in the US had agreed to a $2trn coronavirus stimulus package, leading to some monster gains on Wall Street overnight.

In Japan, the Nikkei 225 was up 8.04% at 19,546.63, as the yen strengthened 0.03% against the dollar to last trade at JPY 111.20.

Of the major components on the benchmark index, automation specialist Fanuc was up 6.78%, Uniqlo owner Fast Retailing added 8.78%, and technology giant SoftBank Group was 10% firmer.

The broader Topix index was 6.87% firmer by the end of trading in Tokyo, settling at 1,424.62.

On the mainland, the Shanghai Composite was 2.17% higher at 2,781.59, and the smaller, technology-heavy Shenzhen Composite added 2.92% to 1,714.86.

South Korea’s Kospi rose 5.89% to 1,704.76, while the Hang Seng Index in Hong Kong increased 3.81% to 23,527.19.

Both of the blue-chip technology stocks were stronger in Seoul, with Samsung Electronics ahead 3.62% and chipmaker SK Hynix rising 7.37%.

The positive moves in Asia came after Wall Street put on a decent showing overnight, following the news that the White House and the Senate had reached a deal on a $2trn stimulus package in a bid to underpin the economy through the Covid-19 coronavirus crisis.

“At last we have a deal,” said Senate majority leader Mitch McConnell.

“In effect, this is a wartime level of investment into our nation.”

The Dow Jones Industrial Average staged its largest single-day percentage gain in 87 years, while the S&P 500 turned in its best performance since 2008.

At the same time, the Cboe Volatility Index, or VIX, was at just under 62, falling back from its high of more than 82 last week, when it breached its high set during the global financial crisis.

Spreadex analyst Connor Campbell said the package, which should be passed later in the global day, was “exactly what investors were looking for after days of intransigence by both Republicans and Democrats".

“The only worry is, if the measures announced in the last few days - that is, the Fed’s unlimited QE and this $2trn plan - don’t create a sustained rebound, it is unclear what will.

“There are always the plans the G7 hinted at on Tuesday, though given the level of international cooperation required for that, who knows when they will materialise.”

Oil prices were lower at the end of the Asian day, with Brent crude last down 3.55% at $26.22 per barrel, and West Texas Intermediate falling 1.27% to $23.71.

In Australia, the S&P/ASX 200 was 5.54% firmer by end-of-play, closing at 4,998.10, as the hefty financials subindex rose 8.67%.

Among the country’s major banking plays, Australia and New Zealand Banking Group rose 11.58%, Commonwealth Bank of Australia added 9.47%, National Australia Bank improved 9.65%, and Westpac Banking Corporation was ahead 9.24%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 managed gains of 1.7% to end at 9,264.38, led higher by subscription television operator Sky - no relation to its UK namesake - which surged 34.2%.

The company had slumped in recent weeks as its cash cows - the broadcasting rights to a number of popular sports - saw their events suspended.

On Wednesday, however, it confirmed it had been deemed an essential service through New Zealand’s lockdown period, and so would continue to trade.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.72% at AUD 1.6665, and the Kiwi advancing 0.05% to NZD 1.7147.