Asian stocks set for higher open on central bank support

  • 9/17/2020
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NEW YORK (Reuters) - Asian shares looked set to rise on Friday following pledges by central bankers globally to do whatever it takes to support the economic recovery while oil perked up as OPEC threatened to clamp down on member states that did not cut output. FILE PHOTO: People wearing protective masks, following the coronavirus disease (COVID-19) outbreak, are reflected on a screen showing stock prices outside a brokerage in Tokyo, Japan August 31, 2020. REUTERS/Kim Kyung-Hoon Australian S&P/ASX 200 futures rose 0.29% in early trading. Japan’s Nikkei 225 futures added 0.09%, while Hong Kong’s Hang Seng index futures rose 0.37%. E-mini futures for the S&P 500 rose 0.04%. The Bank of England said on Thursday it was considering negative interest rates as the UK economy faces rising COVID-19 cases, higher unemployment and a possible new Brexit shock. It also kept its main stimulus programs on hold, citing a faster-than-expected economic recovery from pandemic lows. “Delivering net economic stimulus this way absolutely can be done,” said Sharon Zollner, chief economist at ANZ, said of negative interest rates, which New Zealand’s central bank is also considering. “But will prolonged super-low rates stimulate the ‘right’ behaviours from a long-run perspective? That’s a problem for another day.” Earlier, the Bank of Japan held its short-term interest rate target at -0.1% and said inflation trends, along with job growth, would guide its policy going forward, signaling the central bank’s readiness to ramp up stimulus if job losses heighten the risk of deflation. BOJ governor Haruhiko Kuroda said the central bank would work closely with new Prime Minister Yoshihide Suga’s administration to shield the economy, including by loosening policy further. And in the United States, the Federal Reserve on Wednesday said it would keep rates near 0% through 2023. U.S. stocks fell on Thursday as technology-related shares slid for a second day and data suggested the labor market had shifted into low gear amid fading fiscal stimulus. The S&P 500 ended down 0.84%, and the Nasdaq Composite dropped 1.27%. The Nasdaq’s losses put the index down 10% from its closing record, confirming a correction began on Sept. 2. Adding to the negative sentiment, data showed the number of Americans filing new claims for unemployment benefits fell less than expected last week and applications for the prior period were revised up. U.S. Treasury yields retraced some of their declines as stocks pared losses, but the yield curve remained flatter as investors stayed skeptical of the Fed’s efforts to spur economic growth, and U.S. lawmakers remained stalled on a stimulus package. Oil prices gained more than 2% on Thursday after OPEC and its allies said they would crack down on countries that failed to comply with output cuts. Most recently, U.S. crude rose 0.07% to $41.00 per barrel and Brent was flat on the day at $43.30. The dollar index fell 0.35%, with the euro up 0.05% to $1.1853. The Japanese yen strengthened 0.01% versus the greenback at 104.72 per dollar, while Sterling was last trading at $1.2977, up 0.04% on the day.

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