Shares rise as new daily coronavirus cases fall, pound steadies

Asian shares climbed early on Tuesday as hopes grew that the coronavirus pandemic is waning, while the United Kingdom’s pound steadied following losses after Prime Minister Boris Johnson was transferred to intensive care due to worsening coronavirus symptoms.

The numbers of new coronavirus cases recorded daily were lower in the UK on Monday, as were new cases in Italy, France, Germany and Spain. In New York, Governor Andrew Cuomo said deaths were showing indications of hitting a plateau.
Concerns about Johnson’s health had weighed on the pound, which declined 0.3 percent on Monday and then steadied on Tuesday, to trade at $1.2234 in Asia. Against the euro, it slipped by 0.19 percent to 88.39 pence.

Johnson was admitted to hospital on Sunday night and had been undergoing tests after suffering persistent coronavirus symptoms, including a high temperature, for more than 10 days.

Downing Street had said Johnson was still conscious, though his condition deteriorated in the early evening.

The UK has no formal succession plan should the prime minister become incapacitated, but Johnson has asked Foreign Secretary Dominic Raab to deputise for him.

“The currency market has remained fairly calm, but there will be more downside for sterling if Johnson’s condition worsens,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

In equity markets, stocks gained more than 2 percent in Tokyo and more than 1 percent in Hong Kong and Seoul. Futures on the S&P 500 were little changed after the index closed up 7 percent, at its highest since March 13.

China’s stocks climbed and the yuan was steady as markets there reopened in the wake of further targeted stimulus by the central bank over the break.

Mainland China reported a drop in imported coronavirus cases on Monday, confirming 32 new cases compared with 39 cases a day earlier, its National Health Commission said.

In Japan, Prime Minister Shinzo Abe is expected to announce a month-long state of emergency Tuesday and a record economic stimulus package worth nearly $1 trillion.

Although market bulls are pointing to more attractive valuations and unprecedented fiscal and monetary stimulus, bears are fretting about dismal economic data and the rising corporate costs of the pandemic and subsequent shutdown.

“Optimism on the direction of equity markets will be difficult to maintain until we see more clarity on the corporate earnings outlook and until the dispersion of analysts’ forecasts subsides,” Marija Veitmane, a multi-asset strategist at State Street Global Markets, said in a note.

JPMorgan Chase & Co’s CEO Jamie Dimon said the pandemic will lead to a significant economic downturn and stress mirroring the meltdown that nearly brought down the US financial system in 2008.

On the bright side, South Korea’s Samsung Electronics Co Ltd said its earnings in the first three months of 2020 likely beat earlier estimates, as solid chip sales helped cushion the blow from the coronavirus pandemic on smartphones and TVs.

Samsung Electronics shares were up 1.6 percent in morning trade, compared with a 1.3 percent rise of the broader market.

But at the same time the South Korean tech giant is also expecting a bigger hit to its mobile and consumer electronics sales in the current quarter as the novel coronavirus sweeps through Europe and the US – key markets for its premium smartphones and TVs.

Oil prices rose as hopes rose for a supply cut by the world’s biggest producers. Brent crude gained 2.2 percent to trade at $33.78 per barrel, while US crude rose 2.9 percent to $26.84 a barrel.

Gold was little changed at $1,659 an ounce.

Related Articles

Back to top button