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Asia-Pacific Shares Rise Amid Slowdown in COVID-19 Cases, Rebound in Oil Prices

Oil prices fell on the opening in reaction to the news, but recovered losses in the afternoon of Asian trading hours, underpinning stock prices.
James Hyerczyk

The major Asia-Pacific stock indexes finished higher on Monday with China closed for a bank holiday. Investors were primarily influenced by a slowdown in coronavirus-related deaths and new infections, and an upcoming meeting between OPEC and its allies.

Aiding sentiment further were higher U.S. stock futures which gained more than 1.5% in early Asian trading after U.S. President Donald Trump expressed hope the country was seeing a ‘levelling off” of the coronavirus crisis.

“There are tentative signs that overall market volatility is easing,” analysts at Maybank said in a note.

Maybank analysts also acknowledged that there were signs that markets are becoming “numb” to bad news, and it would take more impactful events or data to shock markets.

On Monday, Japan’s Nikkei settled at 18576.30, up 756.11 or +4.24%. Hong Kong’s Hang Seng finished at 23711.71, up 475.60 or +2.05% and South Korea’s KOSPI Index closed at 1791.88, up 66.44 or +3.85%.

Australia’s S&P/ASX 200 Index settled at 5286.80, up 219.30 or +4.33%. The Chinese stock market was closed.

Reasons to be Optimistic?

Billionaire investor Bill Ackman, founder of Pershing Square Capital Management, said in a series of tweets he is “beginning to get optimistic.” He said cases in New York, a hot spot for the coronavirus in the U.S., “appear to be peaking” while some treatments “appear to help.”

“If this is true, the severity and death rate could be much lower than anticipated, and we could be closer to herd immunity than projected,” Ackman also said. “While it is hard to be positive when we know that tens of thousands more will die and may more will get severely sick, I have no choice but to be more optimistic about the intermediate future based on the data and facts I have seen recently.”

Marc Chaikin Analytics, advises investors to remain cautious.

“Until the spread of the COVID-19 virus peaks and we are closer to a reopening of the U.S. economy, sell rallies and sit on your cash,” said Chaikin. “If we are fortunate to see an effective treatment there will be plenty of capital gains opportunities. For me, capital preservation is more important than capital gains.”

TD Securities’ Mitul Kotecha warned on CNBC’s “Street Signs” that it’s “very, very early days” and “the economic news is still getting worse.”

He further added, while there’s “a lot of uncertainty still” there appears to be signs that the virus may be slowing down in some places. That may fuel “optimism that the lockdowns may not need to persist for a prolonged period of time,” said Kotecha, senior emerging markets strategist at TD Securities.

“It’s going to be a real battle in the days ahead between poor economic data and hopes of some sort of flattening of the curve in countries in Europe and in the U.S., for instance,” he said.


Investors Also Eyeing Crude Oil Market

A scheduled meeting between OPEC and its allies – collectively referred to as OPEC+ – was pushed back, raising fears that a production cut might face challenges.

Oil prices fell on the opening in reaction to the news, but recovered losses in the afternoon of Asian trading hours, underpinning stock prices.

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