Opening trade in New York maintained the rally by global stocks Wednesday, as US lawmakers prepared to vote on a mammoth stimulus package to help the world’s biggest economy resist effects of the COVID-19 pandemic.
The Dow Jones index was up by 2.6 per cent in early trading, helping pull most European markets along with it.
Frankfurt was the outlier, shedding 0.4 per cent in afternoon trading.
Meanwhile, the dollar gained ground against other major currencies, while oil prices slipped lower.
‘The stimulus is now by and large in place,’ said Neil Wilson, chief market analyst at trading group Markets.com.
‘The question is whether it’s enough for the markets.’
‘All we can do is stay at home and hope that in six months, life has moved on and all of these stimulus efforts have protected people and businesses, and accelerated the recovery,’ Craig Erlam, senior market analyst at OANDA Europe.
While COVID-19 continues to spread, traders gave a rare show of optimism after weeks of huge losses. Their eyes are fixed on Washington, where congressional leaders have thrashed out an emergency bill worth as much as $2 trillion — around 10 per cent of US gross domestic product.
The measure would put cash directly into the hands of Americans, provide grants to small businesses and hundreds of billions of dollars in loans for corporations including embattled airlines, and expand unemployment benefits.
The prospect of such massive spending, combined with a Federal Reserve pledge to essentially print as much cash is needed, sent Wall Street into overdrive on Tuesday, with the Dow seeing its biggest rise since 1933.
The S&P 500 enjoyed its best day in more than a decade.
The gains then spread to Asia, which rallied for a second straight day.
Tokyo ended eight per cent higher, with Japanese investors also relieved that the 2020 Olympics had been postponed rather than cancelled.
Hong Kong rose 3.8 per cent, Shanghai was up more than two per cent, while Singapore, Sydney and Manila rallied more than five per cent and Seoul piled on more than four per cent.
Adding to the more upbeat mood was a G7 promise to do ‘whatever is necessary’.
The unprecedented moves were part of a pedal-to-the-metal response to a rapid financial shock caused by the novel coronavirus pandemic, which has locked down countries and stunned the global economy.
Crude oil prices — which have been hammered by the outbreak’s impact on demand as well as by a tussle between Saudi Arabia and Russia — were lower again Wednesday but the drops were much more contained.
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