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Riku Tanaka
April 17 18:31

Stock markets in Asia grow as the re-opening of US economy counterbalances China GDP drop

Asian stock markets picked up on Friday (Apr 17).
Asian stock markets picked up on Friday (Apr 17) as US President Donald Trump's arrangements to progressively re-open the nation’s economy overpowered worries over information demonstrating that China endured its heaviest economic contraction on record as a result of the COVID-19 pandemic.
MSCI's broadest file of Asia-Pacific offers outside Japan gained 2.2% subsequent to arriving at a five-week high. Chinese shares gained 1.04% as the poor GDP data solidified predictions that more financial aid from the government is still to come. Meanwhile stocks in Australia  were up by 1.31%. 
E-Mini prospects for the S&P 500 index exchanged 2.83% higher, which also brought the market to a near five-week high. 

Euro Stoxx 50 futures gained 2.58%, German DAX futures rose 2.9%, while FTSE futures jumped by 2.49%.
Financial information released by China demonstrated that the world's second-biggest economy contracted for the first time in over a quarter-century on account of the COVID-19 outbreak and the subsequently extreme measures that were taken to subdue it. GDP shrank by 6.8% in Q1 year-on-year, marginally more than anticipated, and 9.8% compared to the quarter before it.
March sales figures in the retail sector also dropped by more than was previously projected, yet manufacturing number fell only marginally, which suggests that the industrial sector its is recuperating faster than projected.
Equity markets accepted the data in stride, in light of the fact that the nation had contained the contagion and figured out how to get the largest parts of its economy up and running from a total freeze in February.
"We expect this recovery to continue and to show up in the GDP data from Q2 onwards as more progress is made with the return to economic normalcy," Louis Kuijs, chief Asia economist, at Oxford Economics in Hong Kong.
"However, the upturn will be slowed down by lingering consumption weakness and sliding foreign demand. We expect it to take until Q4 before year-on-year growth reaches around 4%."
In any case, the data that came out of China, and other conjectures that said the world is experiencing the worst economic downturn in decades, hadn’t caused as much damage to Asian stocks as one would expect in such conditions. Traders are directing their attention around whether the pandemic is reaching its zenith and how soon governments will begin to loosen lockdown measures, which have pummeled global economic activity.
A few financial analysts have forewarned, however, that it is too early to definitively state that the pandemic is beginning to level out.
"Stocks are reacting naturally to Trump's talk of re-opening the economy, because some people don't want to be left out of the rally," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo. "The problem is there is a big gap between expectations and the underlying economic reality, which is that many countries are still very weak."
Asian stocks followed gains on Wall Street, as expectations that the US will reduce limitations on businesses boosted risk appetite. Another supporting role was played by reports that were founded in partial data, which implied that patients with the worst symptoms from COVID-19 reacted well to a medication made by Gilead Sciences Inc.
While a few nations around the world are planning to restart their economies, US President Trump said on Thursday (Apr 16) that individual state governors can re-open businesses in an three-phase process. While a number of analysts stay suspicious of the president’s ambitions, equity markets interpreted the remarks as a sign that the worst of the crisis might be over.
Japan's Nikkei stock index grew 3.15% on Friday (Apr 17), and South Korean shares also grew by 3.25%.
Yields on benchmark 10-year US Treasuries grew somewhat from a two-week low in Asia, while Treasury futures dropped in another provisional indication of growing trader sentiment.
The US dollar slumped against the yen, the euro (EUR=EBS), and sterling as faith in a positive future of economic growth diminished safe haven interest for the currency.
Spot gold dropped by 1.48% to US$1,692.10 per ounce in another sign that traders felt increasingly open to risk-taking.
US crude futures tumbled to a nearly two decade low after OPEC's brought down its global demand projections, yet Brent crude jumped by 2.66% to US$28.56 a barrel.