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International
Hotel groups
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A man walks past a securities irm in Tokyo. PHOTO: AP
AP - Wall Street doubled down on its
bet that the worst of the recession
has passed, sending stocks higher
again on Friday despite another
historic, crushing report on the job
market.
Stocks around the world were al-
ready rising before the United States
(US) government gave its monthly
report on jobs, in part on hopes that
the US and China won’t restart their
trade war. After the report showed
employers cut a record-busting 20.5
million jobs last month, the gains
actually accelerated.
While the number is a nightmare,
itwas slightlybelowthe21million that
economists toldmarkets to brace for.
More importantly, investors are bet-
ting they won’t see another report
that bad again because the number
of workers iling for unemployment
beneits has slowly declined the last
ive weeks.
Instead of looking backward at
last month’s job losses, some inves-
tors focussed instead on the prospect
of growth resuming later this year.
They bought stocks of retailers that
laid out plans to reopen in coming
weeks, energy companies that would
beneit as people start driving again
and banks that may skirt the worst-
case avalanche of loan defaults.
“So, equity investors are looking
for that hope in the third and fourth
quarter of this year,” said Director
of Portfolio Strategy at Verdence
Capital Advisors Megan Horneman.
“That’s what this optimism is about.”
The S&P 500 rose 48.61, or 1.7
per cent, to 2,929.80 for its fourth
gain in the last ive days, and it
closed out its irst winning week in
the last three. The Dow Jones In-
dustrial Average added 455.43, or
1.9 per cent, to 24,331.32, and the
Nasdaq composite rose 141.66, or
1.6 per cent, to 9,121.32.
After losing a third of its value in
a little more than a month on wor-
ries about a severe recession, the
S&P 500 has since charged higher
to recover more than half its loss.
The rally started after the Federal
Reserve and Congress pledged tril-
lions of dollars to prop up the econ-
omy through the downturn.
More recently, even as hor-
riic data conirmed the recession
fears were correct, investors have
pushed stocks higher as countries
and many US states laid out plans
to relax restrictions on businesses
meant to slow the spread of the
coronavirus outbreak.
Many analysts are skeptical of the
rally, though, saying the economy
likely won’t recover nearly as vigor-
ously and quickly as the stock mar-
ket has. Friday’s jobs report showed
that the unemployment rate climbed
to its highest level since the Great
Depression. And if reopening econo-
mies leads to a renewed surge in in-
fections, business shutdowns could
sweep the world quickly again.
Because most economic reports
are so backward looking, Horne-
man said she is focussing on things
like passenger trafic at airports and
Open Table restaurant reservations
to get a sense of how quickly the
economy can recover.
“In some aspects, investors are
starting to look at it as the worst is
behind us,” said Senior Investment
Strategist for Allianz Investment
Management Charlie Ripley.
Companies whose proits are
usually most closely tied to the
strength of the economy led the
market higher. Energy producers in
the S&P 500 jumped 4.3 per cent
for the biggest gain of the 11 sec-
tors that make up the index. Indus-
trial companies and inancial stocks
were also stronger than the rest of
the market.
The trio were the hardest-hit sec-
tors earlier in the year on worries
about the coming recession, which
would cause demand for their prod-
ucts to vanish and saddle banks with
bad loans.
Smaller stocks also rose more
than the rest of the market, an indi-
cation that investors expect stronger
growth ahead. Small-cap stocks have
historically sunk more than their big-
ger rivals heading into downturns, in
part because of their more limited
inancial strength, but rebounded
harder in anticipation of recover-
ies. Friday’s 3.6 per cent gain for the
Russell 2000 was more than double
those for big-stock indexes.
Stocks got off to a strong start
earlier on Friday after a Chinese state
media report said top US and Chi-
nese trade negotiators talked on the
phone and are working to implement
a trade deal. That helped calm build-
ing concerns that tensions between
the world’s largest economies may
lare up again.
The last thing investors want is
another round of punishing tit-for-
tat tariffs dragging even more on
an economy already sliding into a
severe recession. In another sign of
less pessimism in the market, the
yield on the 10-year Treasury note
rose to 0.68 per cent from 0.63 per
cent late Thursday. That yield tends
to move with investors’ expectations
for the economy and inlation.
Benchmark US crude oil rose
USD1.19, or 5.1 per cent, to settle at
USD24.74 a barrel, continuing its
strong week and recovering some
more of its record-setting losses
from earlier in the year. Brent crude
oil, the international standard, rose
USD1.51, or 5.1 per cent to USD30.97
a barrel.
In Asia, Hong Kong’s Hang Seng
added one per cent, and stocks in
Shanghai rose 0.8 per cent. South
Korea’s Kospi gained 0.9 per cent.
In Europe, France’s CAC 40 rose 1.1
per cent, and Germany’s DAX rose
1.3 per cent.
HELSINKI (AFP) - Finland’s gov-
ernment will have to implement
a “pain package” of tax rises and
spending cuts worth billions of
euros to rebalance its inances
after the coronavirus crisis, a
group of leading economists
warned on Friday.
In a government-commis-
sioned report, four of the Nordic
country’s best-known economic
thinkers warned of a “lost decade”
of growth and a deep recession
sparked by the economic stand-
still of the coronavirus crisis. “The
corona crisis will impoverish Fin-
land and signiicantly weaken the
balance of Finnish public inances
in the medium term,” the authors,
led by professor Vesa Vihriala, said
in a statement.
The report warned that
spending cuts, tax hikes and
structural changes, worth at
least three to four per cent of
GDP, will be needed to address
the shortfalls.
“This will most likely be sufi-
cient to keep the debt-to-GDP ra-
tio below 90 per cent during the
2020s,” the report said.
The prospect of further cuts
to public inances is likely to be
unwelcome to Finland’s centre-
left coalition, whose leading
Social Democrat party won last
year’s election on a platform of
opposition to the previous ive
years of austerity.
Receiving the report on Friday,
Finance Ministry’s Top Civil Servant
Martti Hetemaki acknowledged
that “being gloomy is being realis-
tic,” and said that dificult decisions
“cannot be left for tomorrow”.
In the immediate term the re-
port called for the safe lifting of re-
strictions in order to try and restore
conidence in the market.
Schools are due to begin con-
tact teaching again next Thursday
in the country of 5.5 million, which
has so far recorded 255 deaths
and 5,600 infections. A limit on
gatherings to 10 people is due
to be increased to 50 on June 1,
as theatres, museums and other
institutions will be allowed to re-
open. The authors said the emer-
gency business payouts so far an-
nounced by the government, part
of a bailout package that is likely
to reach EUR15 billion this year, are
not going to be enough to support
the private sector.
Instead, they called for a more
general system of aid to stop small
andmedium-sized irms going bust,
including helping with staff costs,
but warned that ministers will have
to make choices about which sec-
tors are most worth supporting.
The authors called for a bud-
get stimulus in 2021 year to kick-
start the economy, in the form of
public infrastructure investments
to increase productivity, rather
than tax cuts.
Finland needs painful spending
cuts after corona crisis
Stocks rise on hopes that awful
jobs report marks the bottom
This Ramadhan, Alter Ego will make things interesting by appealing to
local taste while staying true to its Asian fusion roots. Alter Ego is also
tapping into the expertise of its chefs who specialise in Asian and Arabic
cuisines. Customers can also get a loaf of Apple Pound Cake or Banana
Cheese Loaf at a lower price. The restaurant is offering a free Halal
Fellinger sparkling grape beverage for customers who spend over BND40
in a single order. BIBD cardholders are entitled to discounts of up to 50
per cent when spending over BND40.
LOCAL TASTE WITH ASIAN
FUSION ROOTS