SYDNEY – Asian shares were led higher by S&P 500 futures on Monday and oil prices hit a five-week peak as countries’ efforts to re-open their economies stirred hopes the world was nearer to emerging from recession.
Summer weather is enticing much of the world to emerge from coronavirus lockdowns as centres of the outbreak from New York to Italy and Spain gradually lift restrictions that have kept millions cooped up for months.
“The economies of Europe and the US likely bottomed out in April and are slowly starting to come back to life,” wrote Barclays economist Christian Keller in a note.
“However, incoming data from most economies highlight the depth of the contraction, raising risks of longer-term scarring that might undermine the recovery.”
Federal Reserve Chairman Jerome Powell took a cautious line in an interview over the weekend, saying a US economic recovery may stretch deep into next year and a full comeback might depend on a coronavirus vaccine.
Closer to home, data in Japan confirmed the world’s third largest economy slipped into recession in the first quarter, putting it on course for its worst postwar slump as the coronavirus takes a heavy toll.
Adding to the uncertainty were the trade tensions between the United States and China, with Beijing warning it was opposed to the latest rules against telecoms equipment company Huawei.
MSCI’s broadest index of Asia-Pacific shares outside Japan still edged up 0.4 percent. Japan’s Nikkei rose 0.6 percent and Chinese blue chips 0.3 percent.
More carefree were E-Mini futures for the S&P 500 which added 1.1 percent, even though results from a raft of US retailers this week are likely to make grim reading.
EUROSTOXX 50 futures also gained 1.5 percent and FTSE futures 1.4 percent.
Dealers reported much chatter about a possible treatment for COVID-19 from drug maker Sorrento Therapeutics which saw its shares soar on Friday.
Another focus will be the US Treasury Department’s first auction for its 20-year bond on Wednesday. Treasury plans to borrow a record amount of nearly $3 trillion this quarter.
So far, the market has easily absorbed the flood of new debt with 10-year yields holding to a tight range around 0.64 percent.
The dollar has also been largely range-bound, with its safe-haven appeal keeping it well supported overall. Against a basket of currencies, it was last at 100.380 having drifted 0.7 percent higher last week.
The euro was steady at $1.0826, while the dollar was a fraction firmer on the Japanese yen at 107.10.
The pound touched a seven-week low at $1.2073 after the chief economist of the Bank of England said it was looking more urgently at options such as negative interest rates and buying riskier assets to prop up the economy.
