Asia stocks extend rally as economic recovery hopes; STI up 1%

SYDNEY (REUTERS) - Asian stocks rallied for their ninth straight day on Tuesday (June 9) and oil prices jumped as the lifting of coronavirus lockdowns in many countries fed investor hopes of a relatively quick global economic recovery.

Markets have been particularly encouraged by a May US jobs report last week that showed a surprise fall in the unemployment rate, sending Wall Street indices surging with the Nasdaq hitting a record close on Monday.

Global financial markets were battered in March as investors fretted over extent of both the short and longer term damage to the world economy from the coronavirus pandemic. But most indices are now back to pre-Covid-19 levels.

MSCI's broadest index of Asia-Pacific shares outside of Japan rose for a ninth straight session for its longest winning streak since early 2018. It was last up 0.76 per cent at a three-month peak.

Australia's S&P/ASX 200 jumped 2.5 per cent while Chinese shares started on a firm footing with the blue-chip CSI300 index rising 0.4 per cent. Hong Kong's Hang Seng index climbed 1.2 per cent.

Singapore's Straits Times Index was up 1 per cent at 11:09am local time. Shares of Sembcorp Industries (SCI) soared 32.7 per cent or 50 cents to $2.03 with 41 million shares traded. In contrast, shares of its shipyard unit Sembcorp Marine sank 31.8 per cent or 27 cents to 58 cents, with 58.8 million shares changing hands. SCI shareholders will receive between 427 and 491 SembMarine shares for every 100 SCI shares owned with no cash outlay required under a proposed demerger of the two companies announced on Monday.

Japan's Nikkei bucked the regional trend to be down 0.5 per cent.

"The good news is that this shows central banks' effort to stabilise the market have worked," said Tai Hui, Chief Asia Market Strategist at J.P. Morgan Asset Management.

"The current risk rally is driven by investors' belief that the worst of this recession is behind us, which we agree with. Yet, investors need to be mindful of the potential risks ahead."

Tai said the "road to recovery" was still long while the threat of a second wave of coronavirus infections cannot be ruled out yet.

Fears of renewed trade tensions between the United States and China and the second round impact from higher unemployment and bankruptcies worldwide also hung heavy on the outlook.

For now, though, investors were taking a glass-half-full view on the global economy.

Financial, automotive and retail-oriented and energy shares - the stocks most beaten-down since the pandemic slammed markets - have been leading world equity indices higher recently.

Overnight on Wall Street, the Dow rose 1.7 per cent, the S&P 500 gained 1.20 per cent and the Nasdaq Composite added 1.13 per cent.

US stocks were also bolstered by a move by the Federal Reserve to ease the terms of its "Main Street" lending program to encourage more businesses and banks to participate.

Investors are now seeking further clarity on US monetary policy after the Fed's two-day policy meeting ends on Wednesday.

In currency markets, the risk-sensitive Australian dollar hit a five-month top of US$0.7043 after eight straight days of gains but has encountered some selling pressure at those heady levels.

Its New Zealand counterpart jumped to a four-month high.

The safe-haven Japanese yen also nudged up 0.2 per cent at 108.15, while the euro was off a touch at US$1.1285.

In commodities, US benchmark crude rose US$1.28 a barrel to US$38.68 a barrel, while Brent added US$1.13 to US$41.25.

Gold prices were up after a steep decline, boosted by hopes of a dovish monetary policy outlook from the Fed. Spot gold was last up 0.1 per cent at 1,697.1.