Coronavirus: US agrees $2trn relief package for economy sparking rise in Asian markets
Markets up 2% across entire continent – but experts warn against celebrating too soon
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Your support makes all the difference.The US has agreed a $2trillion relief package to help its coronavirus-hit economy – prompting a spike in European and Asian stock markets.
In London, the blue-chip FTSE 100 rose for a second consecutive day on Wednesday, building on a 9 per cent surge the previous day – its second biggest ever percentage rise and its highest ever points gain.
Shares also opened sharply higher in Asia on Wednesday, where markets across the continent were all up by more than 2 per cent.
Japan’s Nikkei 225 index jumped 8 per cent, while Hong Kong added 3.3 per cent.
It comes after the Dow Jones Industrial Average in the US leapt 11.4 per cent higher on Tuesday in its biggest one-day gain since 1933 before the rescue package had even been signed off.
However, despite the gains, investors have warned markets are not out of the woods yet.
Rallies nearly as big as this have been seen over the last few weeks, but none have lasted more than a day.
Economists and investors are therefore still expecting to see some dire economic numbers in the days and weeks ahead.
After Tuesday’s gains, Adam Taback, chief investment officer for Wells Fargo Private Bank, said: “Today was a good day, but we would not necessarily see this as turnaround time.”
He added: “We would caution that the danger is not all behind us at this point.”
Investors had urged Congress to act ahead of the agreement as global markets continued to plummet despite the US Federal Reserve’s promise to create an unlimited amount of money to prevent the world’s biggest economy from plunging into a deep recession.
Katie Nixon, chief investment officer at Northern Trust Wealth Management, described the situation as “sort of like, keep the patient alive in the emergency room so you can provide some treatment options”.
The $2trn relief package will give aid to US workers, businesses and a health care system strained by the rapidly spreading coronavirus outbreak.
The deal was announced shortly after midnight following days of often intense haggling and mounting pressure.
It still needs to be finalised in detailed legislative language, but would give direct payments to most Americans, expand unemployment benefits and provide a $367bn programme for small businesses to keep up with wages for workers forced to stay home.
Additional reporting by Reuters.
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