Asian Shares Jump as Restrictions are Lifted While New COVID-19 Cases Rise in South Korea, ChinaDespite the early strength on Monday, the markets still face headwinds which may limit gains. South Korea warned on Sunday of a potential second wave of cases. Japan is set to launch a second budget to help the country tide over the economic fallout from the pandemic
The Asia-Pacific shares are trading higher early Monday as investors choose to focus on the future instead of the past. In this case, the positive outlook for the future is being fueled by optimism as more countries restart their economies. Additionally, like Wall Street on Friday, Asian investors are ignoring the worst U.S. employment data since World War II.
At 02:56 GMT, Japan’s Nikkei 225 Index is trading 20466.58, up 287.49 or +1.42%. Hong Kong’s Hang Seng Index is at 24685.11, up 454.94 or +1.88% and South Korea’s KOSPI Index is trading 1948.95, up 3.13 or +0.16%.
China’s Shanghai Index is trading 2904.23, up 8.88 or +0.31% and Australia’s S&P/ASX 200 Index is at 5455.60, up 64.50 or +1.20%.
Hong Kong Bounces Back
A week after posting its worst day in 6-weeks, Hong Kong’s Hang Seng Index is bouncing back on Monday. Last week’s selling was fueled by the release of the city’s economic growth data report that showed its biggest-ever quarterly economic contraction. First-quarter GDP dropped 8.9% compared with the same period a year earlier.
Monday’s surge is being fueled by carryover buying from Friday that was fueled by Beijing further opening its financial markets to foreign investors and as talks between U.S. and Chinese trade officials lifted sentiment.
Global Easing of Coronavirus Lockdowns and Restrictions Main Driver of Strength
Asian Traders are not only focusing on the region, but also on the global response to the virus. Investors continue to watch for developments on the coronavirus front amid hopes of global economies reopening as social distancing measures are eased. U.K. Prime Minister Boris Johnson outlined over the weekend a “conditional plan” to slowly reopen society and the economy. Disney is also set to reopen its Disneyland theme park in Shanghai on Monday.
Gains May Be Limited by New Virus Infection Headwinds
Despite the early strength on Monday, the markets still face headwinds which may limit gains. South Korea warned on Sunday of a potential second wave of cases, according to Reuters. That came days after the country, praised for its rapid response to stem the spread of an initial outbreak, eased restrictions. Infections rebounded to a one-month high.
Meanwhile in China, the National Health Commission (NHC) reported 17 new cases, of which 10 were locally transmitted infections and seven were imported, or attributed to travelers from overseas.
New Infections also accelerated in Germany.
Japan Plans Second Package to Combat Economic Impact
Japan’s Nikkei 225 Index jumped early Monday after Reuters reported, citing the Nikkei newspaper, the country is set to launch a second budget to help the country tide over the economic fallout from the pandemic
New measures will include aid for companies struggling to pay rent, and more subsidies for those hit by slowing sales, according to the report.