January 21, 2022

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Stocks Mixed in Holiday-Hit Trading; Dollar Steady: Markets Wrap

(Bloomberg) — Asian stocks saw mixed trading Friday in a holiday-hit session as investors mulled new measures from the Federal Reserve to cushion the fallout from the coronavirus. The dollar steadied after an overnight decline.

Stocks slipped in Tokyo and Shanghai, and ticked higher in Seoul. Australia, Hong Kong and Singapore were among markets closed for holidays, alongside the U.S. and most of Europe. Earlier, U.S. stocks capped their biggest weekly gain since 1974 as investors looked past staggering jobless numbers to another series of sweeping steps from the Fed to provide as much as $2.3 trillion in additional aid. Junk bonds rallied the most since 1998 and Treasuries rose.

Meanwhile, Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, said U.S. fatalities from Covid-19 may be far fewer than earlier projections.

As fresh evidence of the economic toll from the coronavirus pandemic floods in, investors are choosing to focus on unparalleled support from global policy makers. The Fed will wade into the municipal-bond market to an unprecedented degree, can now purchase “fallen angel” bonds from companies that have recently lost their investment-grade ratings, and has expanded its Term Asset-Backed Securities Loan Facility to include top-rated commercial mortgage-backed securities and collateralized loan obligations.

Meantime, European Union finance ministers agreed on a 540 billion-euro ($590 billion) package of measures to combat the economic fallout of the global pandemic.

“The Fed news is really bullish (along with global fiscal news) if we have confidence on ways to deal with the Covid bounce-back and ultimate vaccine solution,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “So positive outcomes on that front lead to fair value estimates going up, improving the risk reward from this level.”

Elsewhere, oil closed lower as investors saw the OPEC+ supply-curb proposal as insufficient to offset estimates for demand destruction from the Covid-19 outbreak. The OPEC meeting ended with no deal — talks are set to resume Friday. Gold traded close to its highest since 2013.

These are the main moves in markets:

Stocks

Japan’s Topix Index fell 0.7% as of 10:37 a.m. in Tokyo.Korea’s Kospi Index rose 0.7%.Shanghai Composite fell 0.3%.The S&P 500 rose 1.5% Thursday.Europe’s Stoxx 600 rose 1.6% Thursday.

Currencies

The yen was flat at 108.48 per dollar.The offshore yuan traded at 7.0589 per dollar, little changed.The euro bought $1.0927, little changed.

Bonds

The yield on 10-year Treasuries fell five basis points to 0.72% Thursday.

Commodities

West Texas crude fell 9.3% to $22.76 a barrel Thursday.Gold rose 0.4% to $1,690 an ounce.

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