Stronger appetite for riskier assets lifted Asian equities in early deals today as government stimulus expectations supported investor confidence in an economic recovery from coronavirus.
Markets for risk assets have been on a tear, carrying major stock market indices to within sight of pre-pandemic, all-time highs.
The rise came as the Nasdaq Composite and the Dow Jones Industrial Average continued their rise from March cornonavirus-lockdown lows to come within 2%, 8% and 11%, respectively, of overtaking all-time closing highs registered in February.
Back home, Life Insurance Corp of India (LIC), the country’s largest buyer of stocks, may cut its equity investment target to about ₹30,000 crore for the current year, the lowest in a decade, as new premium growth declined amid coronavirus-related disruptions, according to a Mint report.
State-run refiner, Bharat Petroleum Corporation (BPCL), Ltd (BPCL) posted a consolidated net loss of ₹1,819.6 crore for the March quarter on inventory loss and lower gross refining margin.
The committee of directors at Tata Steel Ltd has approved raising ₹400 crore through a debt issue. The committee has approved allotment of 4,000 non-convertible debentures (NCDs) of face value of ₹10 lakh each on a private placement basis.
The ₹53,125-crore rights issue of Reliance Industries Ltd (RIL) was subscribed 1.6 times as it closed on Wednesday, in a major boost to the oil-to-telecom conglomerate’s efforts to erase debt.
Meanwhile, the dollar index fell 0.24% against a basket of other currencies early today, having hit an 11-week low on Wednesday. The euro rose as high as $1.1251, a level not seen since 12 March.
But analysts cautioned asset prices would need a recovery in the global economy to sustain gains.
On Wednesday, the Dow rose 2.05%, the S&P 500 gained 1.36% and the Nasdaq Composite added 0.78%.
The pan-European STOXX 600 closed at its highest since March 6. European markets have performed strongly so far this week as several countries eased strict lockdown measures.
The move to riskier assets continued to take down prices for US Treasuries. The yield on the benchmark 10-year reached 0.7333% on Wednesday, up from 0.667% on Tuesday.
A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, reached 55 basis points on Wednesday, the steepest level since mid-March. A steepening curve often points to a stronger economy.
Governments around the world have gradually started lifting tough lockdown measures imposed to contain the coronavirus, which has infected nearly 6.4 million people and killed over 379,000.
Markets await Friday’s US Labor Department May jobs report, which is expected to show unemployment soaring to a post-World War Two high of nearly 20% from 14.7% in April.
On Wednesday, a report showed that US private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen.
Investors are also focused on whether the European Central Bank (ECB) will increase the size of its 750 billion euro ($669 billion) Pandemic Emergency Purchase Programme, when it meets on Thursday.
Oil prices rose again on Wednesday, briefly trading above $40 a barrel, the highest since March, and reflecting increased demand.
Brent crude futures for August LCOc1 settled up 22 cents, or 0.6%, at $39.79 a barrel. The session high of $40.53 was the highest since March 6. West Texas Intermediate (WTI) crude for July CLc1 rose 48 cents, to $37.29 a barrel.
Spot gold added 0.1% to $1,698.39 an ounce early today after losing 1.6 % on Wednesday.
Reuters contributed to the story.