Stock markets across Asia Pacific gained ground on the latest indications of how far big central banks are willing to go with measures to tackle the global economic impact of the coronavirus pandemic.
However, oil prices fell on persisting concern over a global crude glut as the Covid-19 crisis hits energy demand.
Japan’s Topix benchmark added 1.5 per cent on Monday after the country’s central bank pledged to buy an unlimited quantity of government bonds as part of efforts to support the world’s third-largest economy. The Bank of Japan also it would quadruple its limit on corporate debt purchases to ¥20tn ($186bn).
In Hong Kong the Hang Seng climbed 1.6 per cent while China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks moved up 1 per cent, shaking off figures showing that profits for industrial companies fell by a third during March.
South Korea’s Kospi index added 2 per cent and Australia’s S&P 200/ASX rose 1.5 per cent.
Traders said the gains for equities showed investor optimism around big central bank policy decisions this week
However, on Monday West Texas Intermediate, the US oil marker, fell more than 8 per cent to $15.50 per barrel while Brent crude, the international benchmark, slid 1.8 per cent to $21.05.
Fears over the global economic hit from the Covid-19 pandemic have pummelled demand for crude, with prices for WTI last week turning negative for the first time in history.
Futures trading in Asia pointed to gains of 0.8 per cent for the S&P 500 when the US market opens later on Monday. On Friday, the S&P 500 rose 1.4 per cent after President Donald Trump signed the country’s latest, $484bn stimulus bill into law.
London’s FTSE 100 was tipped to open 1.3 per cent higher.
Investors are also pinning their hopes on more stimulus measures from central banks in the US and Europe to combat the paralysing economic impact of the coronavirus. The European Central Bank and the US Federal Reserve also meet later this week.
The Fed this month moved into new territory by announcing it would buy exchange traded funds that own high-yield bonds, adding to existing measures that include purchasing corporate debt. The US central bank slashed rates to near zero in March.
“Central banks are likely to wind back a little, focusing less on blockbuster new programmes and more on improving the operational aspects of existing programmes,” said Frederic Neumann, co-head of Asia economic research at HSBC. The ECB and the Fed “will likely stop to catch their breath”.
The yield on 10-year US Treasuries edged up 0.03 percentage point to 0.626 per cent. Gold was a touch lower at $1,723.50 per ounce, after moving above $1,700 for the first time this month and last week touching its highest level this year.