Global shares extend gains on U.S. stimulus, upbeat data

TOKYO: Global shares tried to extend gains on Thursday on renewed hopes for fresh U.S. stimulus measures, but mounting uncertainty ahead of America’s presidential election and technical problems in Japan kept gains in check.

S&P500 futures rose 0.6% in Asia, extending Wall Street shares’ rebound overnight after strong employment data and talk of progress on long-delayed COVID-19 relief legislation.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3%, with Australian shares rising 1.4%.

But regional trade was thinned by system glitches at the Tokyo Stock Exchange (TSE) and holidays in Greater China and South Korea.

Technical problems at the TSE prompted the suspension of all share trading in Japan. The TSE said trading would be halted all day and said it was not sure when it can recover its systems.

Derivatives trading in Osaka was unaffected. Nikkei futures rose 0.5% in tandem with gains in U.S. futures.

On Wednesday, the S&P500 gained 0.83% and the Nasdaq Composite added 0.74%, even though they wrapped up September with their first monthly declines since March, when mandated coronavirus shutdowns slammed the economy.

A spate of economic data mostly surprised to the upside, with the ADP National Employment index blowing past analysts’ expectations and pending home sales surging to an all-time high.

“The U.S. data is surprisingly strong, so that underpins the market. But I don’t expect a clear-cut trend in markets until we see the outcome of the U.S. election,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

Also helping to boost risk appetite, U.S. House of Representative Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both expressed hope for a breakthrough in partisan stimulus negotiations.

But many market participants remained cautious after Tuesday’s chaotic presidential debate, which heightened fears that a disputed ballot on Nov. 3 could lead to a long and messy transfer of power.

President Donald Trump and Democratic challenger Joe Biden talked over each other and traded insults as they sparred over the COVID-19 pandemic, healthcare and the economy.

“Global investors may be pulling back from the U.S. as the election approaches and the political dysfunction in Washington is laid bare,” said Chris Zaccarelli, chief investment officer with Independent Advisor Alliance in Charlotte, North Carolina.

“But they also need to take into consideration that a weaker U.S. economy could presage a weaker global economy, which may drive investors to safe-haven assets” later in 2020, he added.

In the currency market, the robust U.S. data and stimulus hopes helped to push down the U.S. dollar against riskier currencies.

The euro rose 0.1% to $1.1733 while the Australian dollar also ticked up 0.1% to $0.7171.

The offshore Chinese yuan gained 0.3% to 6.7635 per dollar, while the yen was little moved at 105.50 to the dollar.

In commodities, oil held firm, with U.S. crude futures flat at $40.23 per barrel and Brent futures up 0.1% at $40.22 a barrel.