Asian markets at three-month high on hope of Covid-19 recovery

Stock markets in Asia have risen to their highest level for almost three months on the back of renewed optimism that the global economy will recover strongly from the coronavirus crisis. Despite the rising markets, in Australia the treasurer has announced the country is in its first recession for 29 years because of the pandemic.

The spread of the virus has become increasingly alarming in Brazil, which registered another record number of fatalities from Covid-19 on Tuesday, the health ministry said. The situation also worsened elsewhere in Latin America.

After shares on Wall Street shrugged off another night of unrest on the streets of American cities to post a third straight day of gains, markets soared upwards from Seoul to Sydney and Tokyo to Hong Kong. The optimistic mood was rooted in a belief among investors that central banks and governments will unleash more fiscal and monetary stimulus in the coming months – especially in Europe – to ward off the economic impact of virus-related lockdowns.

Figures released from China on Wednesday showing a strong bounce in its services sector. The monthly purchasing managers’ index for the sector came in at 55 points for May compared with 44 in April. Any figure above 50 means the sector is growing.

One company that has seen rapid increase in its share price is Zoom, the videoconferencing provider. Its financial results on Tuesday night showed it made $27m in the first quarter of the fiscal year compared with just $198,000 a year ago. It expects sales to double in the coming year as people around the world flock to its video service despite concerns about security. Shares in Zoom have tripled in value this year and it is worth more than the major US airlines combined.

Figures out on Wednesday showed that the Australian economy shrank 0.3% in the quarter to March with the June quarter expected to show another slump. In South Korea the government on Wednesday proposed its biggest stimulus package yet. The virus has already thrust the world’s 12th-largest economy into a 1.3% quarter-on-quarter contraction in the January-March period, the biggest drop in gross domestic product since the 2008 global financial crisis.

The 35.3tn won ($29bn) package is the third announced by the government of Moon Jae-in in response to the virus, after boosts of 11.7tn and 12.2tn won in March and April. The objectives include the creation of 550,000 jobs and providing “emergency funds” to business owners.

The virus has infected 6.37 million people globally and more than 380,000 have died, according to the latest figures from Johns Hopkins University.

Brazil registered 28,936 additional cases of the novel coronavirus in the 24 hours to Tuesday evening, the ministry said, and 1,262 deaths. There are now 555,383 total confirmed coronavirus cases in Brazil and 31,199 coronavirus deaths. It is the second worst affected country behind the United States.

The fresh record came as the rightwing president, Jair Bolsonaro, continued to belittle the threat of the virus, warning that the economic fallout from quarantine measures would be worse than the pandemic itself. “I regret each of the deaths but that’s everyone’s destiny,” Bolsonaro told supporters outside his palace in the capital, Brasília.

Brazil’s most populous state, São Paulo, registered a record number of deaths on Tuesday taking the total number of fatalities there to nearly 8,000. Rio de Janeiro has Brazil’s second-highest death toll with 5,686 deaths followed by the north-eastern state of Ceará where 3,421 people have died.

Scientists and medical experts believe the situation is dire and likely to get worse. “Not even in our most dreadful nightmare could we have imagined the situation we are now in,” Drauzio Varella, a doctor and broadcaster, wrote in one of Brazil’s top newspapers.

Mexican health authorities reported on Tuesday an additional 3,891 cases of Covid-19, a new record of daily cases, and 470 more deaths. This took the total number of known cases to 97,326 and 10,637 deaths. Health authorities have previously said the real number is higher.