Stocks and currencies in emerging Asian markets rallied on Tuesday after the Federal Reserve announced the launch of its corporate bond buying program, giving relief to investors otherwise fearing a fresh outbreak of coronavirus in China.
The Fed’s announcement gave a much-needed boost to risk appetite in Asia, where currencies and stocks had sold off after the emergence of new cluster of COVID-19 cases in Beijing, and other countries as lockdowns are eased gradually.
“While it is almost inevitable that we see bouts of new virus cases globally, ultimately the massive liquidity injection from major central banks will overshadow concerns, in our view,” said Edward Ng, a Singapore-based portfolio manager at Nikko Asset Management.
Despite previously being announced, the Fed’s program to buy investment grade US corporate bonds in the secondary market from Tuesday came with more details overnight, lending support to Wall Street and reinforcing hopes that authorities would continue to flood the market with liquidity.
According to Bloomberg News, the US government is also preparing a nearly $1 trillion infrastructure proposal.