Asia report: Markets advance as investors digest week of stimulus

Markets in Asia finished in the green on Friday, as investors digested the ongoing stimulus coming out of central banks amid the Covid-19 coronavirus pandemic, and China kept its loan prime rates unchanged from February.

In Japan, markets were closed for a public holiday, as the yen strengthened 0.63% against the dollar to last trade at JPY 110.01.

On the mainland, the Shanghai Composite rose 1.61% to 2,745.62, and the smaller, technology-heavy Shenzhen Composite was 1.28% firmer at 1,704.46.

The People’s Bank of China stood pat on its loan prime rates for March, keeping the one-year rate at 4.05% and the five-year rate at 4.75% from February.

South Korea’s Kospi surged 7.44% to close at 1,566.15, while the Hang Seng Index in Hong Kong added 5.05% to 22,805.07.

Both of the blue-chip technology stocks were well into the green in Seoul, with Samsung Electronics up 5.7% and chipmaker SK Hynix adding 8.41%.

Investor focus remained on the evolving Covid-19 situation, with central banks from across the globe taking the secateurs to their interest rates in recent days.

The US Federal Reserve, the Bank of England, and the Reserve Banks in both Australia and New Zealand are among those to have slashed their rates recently in response to the pandemic.

Markets.com analyst Neil Wilson still sounded a note of caution, however, suggesting it could just be a case of "false optimism".

“The full extent of the economic damage remains unknown, yet markets tend to move ahead of the real world and will be pricing for 2021-22 already - global stocks will overshoot and bottom out well ahead of the real economy," he said.

“On the other hand, a drawdown of this scale usually takes months to play out. Picking a bottom is always the hardest part of trading.”

Wilson said the problem, as ever, was the weekend risk.

“Are investors prepared to hold much of a book over the weekend?

“And, of course, whilst we see glimpses of stability in markets, volatility remains elevated and uncertainty over the economic outlook is high.”

Oil prices rose during the Asian session, with Brent crude last up 3% at $29.35 per barrel, and West Texas Intermediate adding 3.18% to $26.76.

In Australia, the S&P/ASX 200 was 0.7% higher at 4,816.60, as small businesses in the sunburnt country were given some loan respite from their banks.

The Australian Banking Association said its members would defer loan repayments for small firms by six months, which would affect more than AUD 100bn of existing SME lending.

Association chief executive officer Anna Bligh said the move could see up to AUD 8bn be placed “back into the pockets of small businesses”.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 managed to close 0.9% above the waterline after a choppy session, finishing at 9,196.42.

Flag carrier Air New Zealand, which is majority state-owned, saw its shares plunge 35.7% after it was handed a NZD 900m reprieve from the government.

The loan would keep the airline afloat through a period of very little flying, New Zealand’s finance minister said, although future dividend payments would be off the table while the debt was outstanding.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 2.49% at AUD 1.6975, and the Kiwi advancing 2.58% to NZD 1.7173.