Asian stocks set to rise after Wall Street tech-driven rally

imageEconomy19 minutes ago (Aug 20, 2020 08:05PM ET)

(C) Reuters. Man wearing a face mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai

By Chibuike Oguh

(Reuters) – Asian equities were poised to rise on Friday after a tech-driven rally on Wall Street in which the Nasdaq hit a record high despite downbeat data that affirmed the Fed’s dour outlook on U.S. economic recovery.

Markets had opened lower after data showed an unexpected rise of more than 1 million in new U.S. claims for unemployment assistance, which reinforced the Fed’s warning on Wednesday about the slackening of the labor market as coronavirus cases rise.

But gains in Apple Inc (NASDAQ:AAPL), Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) underpinned a rally in Wall Street’s three main indexes as investors bet the tech giants would ride out the economic crisis.

“It was another great day for tech stocks, continuing this trend that companies doing well are those driving innovation or whose businesses haven’t been disrupted by the shutdown,” said Mitch Rubin, chief investment officer at RiverPark Funds.

“But there’s still this tug of war going on that tech leadership is overdone.”

Australian S&P/ASX 200 futures rose 0.17%, {{178|Japan’s NiNikkei 225 futures added 0.13%, while Hong Kong’s Hang Seng index futures rose 0.71%.

A sudden bearishness had fallen on investors on Wednesday, with the S&P 500 and Nasdaq closing lower, after minutes from the Fed’s latest policy meeting gave a somber assessment of the U.S. economy as it grapples with the pandemic. The Fed has ruled out, for now, more dovish easing policy measures.

That pessimism was reinforced in early trading on Thursday as new U.S. jobless claims data came in well above the forecast of economists polled by Reuters that expected 925,000 new applications in the latest week.

But U.S. tech stocks defied the downbeat mood and extended their upward streak. Tech-heavy Nasdaq clocked its 19th record closing high since early June, when it confirmed its recovery from the coronavirus sell-off. Thursday’s record close was its 35th so far this year compared with 31 record closing highs in 2019 and 29 in 2018.

The benchmark S&P 500 index also completed its fastest recovery from a bear market this week, joining the Nasdaq in scaling new peaks despite signs that other parts of the U.S. economy are still far away from pre-pandemic levels. A bull market has now been confirmed for the S&P 500.

On Wall Street, the Dow Jones Industrial Average rose 0.17%, the S&P 500 rose 0.32%, and the Nasdaq Composite gained 1.06%.

Gold prices rebounded overnight and after the U.S. jobless data on demand for the safe-haven asset.

Spot gold added 0.8% to $1,945.61 an ounce. U.S. gold futures settled down 1.2% to $1,946.50 an ounce.

Oil prices fell about 1%, meanwhile, as concerns mounted about excess crude supplies. The decline came after Reuters reported that some members of the Organization of the Petroleum Exporting Countries and its allies, known an OPEC+, would need to cut output by an extra 2.31 million barrels per day (bpd) to make up for recent oversupply.

OPEC+ had said on Wednesday the oil market recovery appeared to be slower than anticipated with growing risks of a prolonged second wave of the pandemic.

U.S. crude futures settled down 0.8% at $42.58 per barrel. Brent crude futures settled at $44.90 per barrel, down 1%.

Asian stocks set to rise after Wall Street tech-driven rally

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