Global Stocks Up On $2trn US Relief Package
A Wall Street rally powered global gains in stocks on Thursday despite a record number of new unemployment filings in the United States, as traders focused on the unanimous passage of a $2tn coronavirus relief bill in the US Senate and the possibility of more stimuli to come.
The legislation is intended to flood the country with cash in a bid to stem the crushing impact the epidemic has already had on the world’s largest economy.
Nearly 3.3 million Americans filed for unemployment benefits over the past week, eclipsing the previous record of 695,000 set in 1982. The bill is heading for the House of Representatives for a vote on Friday.
“In less than two weeks, we have moved from full employment to a number of job destruction we have never experienced in a period of peace,” wrote Christopher Dembik, head of macro analysis at Saxo Bank.
According to Reuters, earlier on Thursday, Federal Reserve Chair Jerome Powell said the US economy is likely in recession already but that reopening businesses should be dictated by the control of the virus’ spread, in contrast to the urging by some of President Donald Trump’s advisers for a faster reopening.
The US president has said he wants the economy to be “roaring” by Easter, in a little over two weeks.
Mnuchin said the central bank would lend “aggressively” to ensure the economy can withstand the sudden sharp drop in activity, with an expected $424bn commitment from the US Treasury to cover any losses, allowing the Fed to unleash perhaps $4tn for credit to “Main Street.”
The astronomical number of jobless filings left some wondering if the stimulus package, despite its size, would be enough.
“If these numbers continue for three or four weeks, there will be demand for more fiscal support,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
She said the stock market reaction would suggest “that market participants expect a larger stimulus package or fiscal package from the government than the $2 trillion that has been agreed upon.”
The Dow Jones Industrial Average rose 1,115.19 points, or 5.26 per cent, to 22,315.74, the S&P 500 gained 118.5 points, or 4.79 per cent, to 2,594.06 and the Nasdaq Composite added 303.84 points, or 4.11 per cent, to 7,688.13. Copyright PUNCH.
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