US stock futures recover as massive stimulus deal is reached, while Asian stocks extend their rally

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(CNN) — US stock futures pared losses Wednesday as political leaders in the country reached a major deal overnight about a $2-trillion stimulus bill that will provide a jolt to America's coronavirus-striken economy.

Asian markets, meanwhile, extended their rally on the news. They had already been climbing following Tuesday's major surge on Wall Street, which was driven by optimism about the US government's response to the pandemic.

Dow futures were last up 100 points, or 0.5%, moving out of the red as news broke that White House and US Senate leaders had finally capped days of marathon negotiations that produced one of the most expensive and far-reaching measures in the history of Congress.

S&P 500 futures were last down 0.2%, erasing a loss of more than 2%. Nasdaq futures, though, traded between small gains and losses.

Japan's Nikkei 225 ended the day up 8%, rallying into the close. South Korea's Kospi gained 5.8%. Hong Kong's Hang Seng Index increased 3%, while China's Shanghai Composite was last up 2.3%, extending earlier gains after news of the US deal was announced.

Australia's S&P/ASX 200 closed up 5.5%. Markets in Sydney finished trading before US officials said they reached an agreement.

"Coming on the heels of the central banks, there is increasing optimism that politicians are starting to understand the scale of the economic stop coming our way, as the death toll across Europe and the US continues to rise," wrote Michael Hewson, chief market analyst at CMC Markets UK, in a research note.

Even so, he noted that most bear markets experience "sharp and violent counter moves to the upside," adding that was the case during the 2008 financial crisis.

Tuesday's upswings "could well be another bull trap, and an opportunity to sell at better levels, if politicians disappoint," Hewson added.

The full details of the US stimulus package have yet to be released. But some elements have come into sharper focus over the last 24 hours: There will be $250 billion set aside for direct payments to individuals and families, $350 billion in small business loans, $250 billion in unemployment insurance benefits and $500 billion in loans for distressed companies.

CNN's Manu Raju, Ted Barrett, and Kristin Wilson contributed to this report, which was first published on CNN.com, "US stock futures recover as massive stimulus deal is reached, while Asian stocks extend their rally."