US stocks rose on Wednesday following the announcement overnight by congressional leaders of an agreement on a deal for an unprecedented stimulus package to help the economy recover from the coronavirus outbreak.
The Dow Jones Industrial Average increased 482 points, or 2.3 per cent, its first gains in consecutive trading sessions since February 5.
The benchmark index, however, slid dramatically in late trading, losing more than 700 points in the last 20 minutes alone, indicating investors jitters resumed as the Covid-19 outbreak continues to spread.
The Standard & Poor’s 500-stock index closed up 1 per cent, and the Nasdaq composite, heavy with tech stocks, ended down 0.5 per cent.
Wednesday followed Tuesday’s record session, when the Dow soared more than 2,100 points, or 11 per cent – its best point increase ever and its biggest one-day percentage gain since 1933.
The White House and Senate leaders reached a deal overnight on a massive US$2 trillion stimulus bill to help US businesses and ordinary Americans to combat the impact of the coronavirus outbreak.
The US Senate was expected to take up the legislation later on Wednesday, but a dispute over a key unemployment insurance proposal threatened to delay the vote.
Former Federal Reserve Chairman Ben Bernanke said earlier in the day that the US economy should experience a quick rebound after a “very sharp” recession.
“If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” Bernanke told CNBC’s “Squawk Box.”
Earlier in Europe, stocks turned mixed later in the session, shedding some of their early gains as a sharp rise in the number of coronavirus victims brought back unease among investors.
Asia-Pacific markets, meanwhile, continued their rally, in anticipation of the US vote on the stimulus package.
The Hang Seng Index added 3.8 per cent, in its first back-to-back gain in more than five weeks. The Shanghai Composite Index closed with a 2.2 per cent gain.
South Korea’s Kospi closed up 5.9 per cent and the tech-heavy Kosdaq rose 5.3 per cent. Japan’s Nikkei 225 closed up 8 per cent. Australia’s S&P/ASX200 increased 5.5 per cent, and New Zealand’s S&P/NZX50 rose 1.7 per cent.
Analysts said many investors were still swamped with uncertainty.
“When does risk sentiment turn on bright? Everyone is looking for a canary in the coal mine. Still, ultimately for risk sentiment to turn back to bright, investors need conclusive evidence of coronavirus infection curves flattening, bringing an end to lockdowns in sight,” said Stephen Innes, chief global strategist at currency trading platform AxiCorp.
Others said to look to Italy for clues.
“This week, whether we see Italy’s coronavirus cases begin to fall following the extensive containment measures taken will be a key bellwether of an end to the crisis,” wrote César Pérez Ruiz, head of investments and chief investment officer at Pictet Wealth Management.
Additional reporting by Louise Moon
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