SYDNEY (Reuters) – Asian shares crept ahead on Monday and oil prices hit a five-week high as more countries re-opened their economies stirring hopes the world was nearer to emerging from recession.

Summer weather is enticing much of the world to emerge from coronavirus lockdowns as centres of the outbreak from New York to Italy and Spain gradually lift restrictions that have kept millions cooped up for months.

“The economies of Europe and the U.S. likely bottomed out in April and are slowly starting to come back to life,” wrote Barclays economist Christian Keller in a note.

“However, incoming data from most economies highlight the depth of the contraction, raising risks of longer-term scarring that might undermine the recovery.”

Federal Reserve Chairman Jerome Powell took a cautious line in an interview over the weekend saying a U.S. economic recovery may stretch deep into next year and a full comeback might depend on a coronavirus vaccine.

Late Sunday, Powell outlined the likely need for three to six more months of government financial help for firms and families.

Data out on Friday had shown retail sales and industrial production both plunged in April, putting the U.S. economy on track for its deepest contraction since the Great Depression.

Closer to home, data in Japan showed the world’s third latest economy slipped into recession in the first quarter, putting it on course for its worst postwar slump as the coronavirus takes a heavy toll.

Adding to the uncertainty was the trade tensions between the United States and China, with Beijing warning it was opposed to the latest rules against Huawei HWT.UL.

All of which made for a guarded mood and MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.1% in early trade. Japan’s Nikkei .N225 rose 0.2% and South Korean stocks .KS11 0.1%.

E-Mini futures for the S&P 500 ESc1 added 0.7%, though results from a raft of U.S. retailers this week are likely to make grim reading.

Dealers reported much chatter about a possible treatment for COVID-19 from drug maker Sorrento Therapeutics (SRNE.O) which saw its shares soar on Friday.

Another focus will be the U.S. Treasury Department’s first auction for its 20-year bond on Wednesday. Treasury plans to borrow a record amount of nearly $3 trillion this quarter.

So far, the market has easily absorbed the flood of new debt with 10-year yields US10YT=RR holding to a tight range around 0.64%.

The dollar has also been largely range-bound with its safe-haven appeal keeping it well supported over all. Against a basket of currencies, it was last at 100.380 =USD having drifted 0.7% higher last week.

The euro was steady at $1.0820 EUR=, while the dollar edged up 0.2% on the Japanese yen to 107.25 JPY=.

The pound touched a seven-week low at $1.2073 GBP= after the chief economist of the Bank of England said it was looking more urgently at options such as negative interest rates and buying riskier assets to prop up the economy.

In commodity markets, the flood of liquidity from central banks combined with record-low interest rates to help lift gold to a seven-year peak. The metal was last up 1% to $1,758 an ounce XAU=.

Oil prices reached their highest since March as demand picked up as countries around the world eased travel restrictions.

Brent crude LCOc1 futures firmed 96 cents to $33.46 a barrel, while U.S. crude CLc1 rose 98 cents to $30.41.

Editing by Shri Navaratnam

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Chinese UK ambassador says Huawei decision ‘unfair’

LONDON — China’s ambassador to the U.K. has questioned whether Britain can offer a fair business environment following its decision to ban Huawei from taking part in the country’s high-speed wireless network. China’s ambassador to Britain, Liu Xiaoming, tweeted that…

India’s embattled Yes Bank debt writedown to hit sector capital-raising

MUMBAI/HONG KONG (Reuters) – The unexpected writedown of some bonds issued by crisis-hit Indian lender Yes Bank Ltd (YESB.NS) as part of a state-led rescue is set to raise borrowing costs and make capital-raising tougher for other banks, investors and…

The shift toward remote work could leave blue-collar workers behind

Bharat Ramamurti is managing director of the corporate power program at the Roosevelt Institute. The opinions expressed in this commentary are his own. Covid-19 has forced millions of Americans to work from home. And it’s expected that, even after we…

Toyota prepping for gradual re-start in Mexico: spokesman

MEXICO CITY (Reuters) – Toyota Motor Corp’s Mexico unit is in a preparation phase for the gradual re-start of its operations in the states of Baja California and Guanajuato, a spokesman told Reuters on Monday. “This stage includes the implementation…