Asian shares higher after jobless data snaps Wall St rally

Daniel Fowler
June 5, 2020

Another sign of the optimism on trading floors came with the Nasdaq climbing to within spitting distance of its all-time high yesterday, while the S&P is less than 10 per cent short of its own record.

Citing statistics, on the day's Wall St. wind down, the S&P 500 shed 0.43 per cent to 3,109.29 and the Dow Jones had rounded off the day slightly lower to 26,247.66, while the tech-heavy Nasdaq Composite had curbed out 0.61 per cent to wrap up the day at 9,624.24.

Investors are hoping that the worst of the recession has already passed, or will soon, as governments around the country and around the world slowly lift restrictions meant to corral the outbreak. Economists expect it to show employers slashed 8.5 million jobs last month, down from 20.5 million in April, and that the unemployment rate jumped to 19.8% from 14.7%. Casino stocks gained as Las Vegas began to open this week.

Many professional investors have been arguing that the stock market's rally, which had reached almost 40% since late March, was overdone and that a pullback probably was coming.

Rising U.S. -China tensions and the possibility of second waves of coronavirus infections are other reasons for caution, they say.

The next big piece of economic data to bolster or weaken the market's optimism about the economy's prospects lands early Friday, when the Labor Department releases its monthly jobs report for May. The recovery for the economy is likely to be much slower than the sharp rebound the stock market has just undertaken, which could be setting investors up for disappointment. In company news that broke after the market close yesterday.

Continuing a recent trend, investors on Friday continued to move out of stocks that had been earlier winners in the weak, stay-at-home economy and into companies that would benefit most from a growing economy.

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The S&P 500 is now within 8.1% of its record set in February after earlier being down almost 34%.

The yield on the 10-year Treasury rose to 0.81% from 0.76% late Wednesday.

Investors also shrugged off China's Monday threat of retaliation against President Trump's move to start ending the US's special trade relationship with Hong Kong after Beijing moved to restrict the territory's autonomy.

Markets got some traction from hopes for more monetary and government stimulus as the European Central Bank announced a commitment to buying 600 billion euros ($680 billion) more of bonds, almost doubling its asset purchasing program.

The French CAC 40 was down 0.2%, Germany's DAX lost 0.5% and the FTSE 100 in London dropped 0.6%.

Travel-related companies were also strong, after their stocks got pummeled early in the outbreak on worries that no one would want to fly or go onto a cruise ship for a long time.

U.S. WTI crude oil futures (July) eased 0.3% to $37.18 a barrel. Brent crude oil for August delivery rose 3.3% to $39.58 a barrel.

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