Asian shares make cautious gains even as Japan falls into recession
Asian shares made cautious gains on the back of S&P 500 futures and a rise in oil prices, even as Japan slipped into recession.
Japan has fallen into recession as the coronavirus outbreak continues to take its toll on the global economy.
Japan’s economy shrank 3.4 per cent in the first three months of 2020 compared to a year ago. It follows a 6.4 per cent decline in the fourth quarter of 2019, pushing it into a technical recession.
Japan did not enter into a full national lockdown but issued a state of emergency which hit supply chains and businesses. The government announced a $1 trillion stimulus package.
Prime Minister Shinzo Abe has pledged a second budget later this month to announce further spending measures to help the country through the outbreak.
Messages from central banks across the world have remained cautious. Federal Reserve chair Jerome Powell warned of the dangers of a second wave of coronavirus. The Bank of England’s Andy Haldane refused to rule out negative interest rates, even after governor Andrew Bailey ruled them out last week.
Despite the gloomy news out of Japan, the country’s Nikkei index rose 0.5 per cent. Across Asia, shares made cautious gains as oil prices hit a five-week peak and and S&P 500 futures rose.
The Hang Seng Index edged up 0.31 per cent, while the Shanghai Composite was up 0.5 per cent.
WTI Crude and Brent are up more than three per cent, building on gains from the past few weeks. As the global economy starts to reopen, the oil glut has eased somewhat helping prices.
Sterling traded at a seven-week low which could give FTSE 100 an early boost, while European indices are also anticipated to open higher.