US Senate passes $2 trillion rescue package

The US Senate passed the nation's largest-ever rescue package late on Wednesday, a $2 trillion lifeline to suffering Americans, depleted hospitals and an economy all ravaged by a rapidly spreading coronavirus crisis.

The monster deal thrashed out between Republicans, Democrats and the White House includes cash payments to American taxpayers and several hundred billion dollars in grants and loans to small businesses and core industries. It also buttresses hospitals desperately in need of medical equipment and expands unemployment benefits.

The measure cleared the Senate by an overwhelming majority and was headed next to the House of Representatives, which must also pass it before it goes to President Donald Trump for his signature.

“The legislation now before us now is historic because it is meant to match a historic crisis," said Minority Leader Chuck Schumer, D-N.Y. 

“Our health care system is not prepared to care for the sick. Our workers are without work. Our businesses cannot do business. Our factories lie idle. The gears of the American economy have ground to a halt."

The package is intended as relief for an economy spiraling into recession or worse and a nation facing a grim toll from an infection that's killed nearly 20,000 people worldwide.

Treasury Secretary Steven Mnuchin, asked how long the aid would keep the economy afloat, said: “We’ve anticipated three months. Hopefully, we won’t need this for three months."

Underscoring the effort's sheer magnitude, the bill finances a response with a price tag that equals half the size of the entire $4 trillion annual federal budget.

Insistently optimistic, President Donald Trump said of the greatest public-health emergency in anyone's lifetime, "I don’t think it's going to end up being such a rough patch" and anticipated the economy soaring “like a rocket ship” when it's over.

Asia markets mixed

The unprecedented $2 trillion plan – described by Senate Majority Leader Mitch McConnell as a "wartime level of investment" – helped spur a surge across global equities as panicked traders worried about the impact of the coronavirus sweeping the planet.

But another advance on Wall Street was blunted Wednesday as it emerged that four Republican senators have baulked at the generous provisions agreed to in the bipartisan deal with the White House.

The plan, together with a huge bond-buying programme by the Federal Reserve that effectively prints cash, is part of an unprecedented global response to the outbreak, which has even seen Germany put together a list of measures worth more than $1 trillion.

The emergence of uncertainty, however, weighed on Asian investors, who were also in the market for a little profit-taking following the recent rally.

Tokyo, which soared by almost a fifth in three days, ended the morning session 3.8 percent lower, while Hong Kong lost more than one percent, Seoul and Shanghai eased 0.2 percent each.

Singapore sank more than two percent after data showed the city-state's economy suffered its worst quarterly contraction since the financial crisis more than a decade ago, giving global investors an early insight into the economic effects of the pandemic.

Singapore is considered a bellwether for trade-reliant Asian countries.

Jobless data in view

There were some gainers across the region, with Sydney up more than one percent, while Jakarta, Manila, Kuala Lumpur and Wellington climbed between 2.5 and 5.5 percent.

But while the US bill provides much-needed support, observers continue to err towards caution with most now expecting the global economy to plunge into recession as countries go into lockdown, turning off the growth taps.

"While this is good news... it's impossible to gauge the ultimate economic impact of the COVID-19 pandemic for weeks, possibly months, and until that point, the sustainability of any rally in oil or equity markets is questionable and suggests the current high level of volatility will likely extend," said AxiCorp's Stephen Innes.

"All the stimulus chatter will fade if the COVID-19 headcount curve goes vertical. The reality is the 'Big Bazooka' sway is impossible to sustain, and not to mention the surprise effects greatly diminish. Ultimately, policy is harder to maintain the more protracted virus outbreaks continue."

While the progress of the stimulus is in view, investors were also nervously awaiting the release later Thursday of US jobless claims data, which is expected to show a massive rise.

"The high-frequency data will confirm we're in a horrible vortex of the fastest and most substantial rise in the US unemployment in modern financial history," Innes added.

Also Thursday, leaders of the Group of 20 will be holding a summit by teleconference, with hopes it can provide a united front in the face of the pandemic after the group faced criticism that it has been slow to address the crisis.

French presidential sources said the virtual meeting would focus on "coordination on the health level" as well as sending a "strong signal" to financial markets over efforts to stabilise the global economy.