Asian and European equities shot higher on Tuesday as growing fears about a possible second wave of infections was overshadowed by the US Federal Reserve’s (Fed’s) launch of a massive programme to support Main Street businesses hit by the virus lockdown.

The rally across the region helped wipe out most of the losses suffered on Monday following news of a spike in new cases in Beijing, Florida, Texas and Tokyo, among other places.

Investors were also taking heart from reports the US is eyeing a huge infrastructure stimulus as well as the easing of lockdowns around the world, with several European countries opening their borders and British shops trading again.

But the main driver of the gains was the Fed’s Main Street Lending Program and an emergency lifeline under which the Fed will buy up to $750 billion in corporate bonds.

The Fed several times in recent weeks was on the verge of rolling out the Main Street scheme, but held off as it expanded the criteria to reach more struggling companies.

The plan is part of a massive financial backstop put in place by the bank to protect the economy from the worst of the virus crisis. The government has also pledged trillions of dollars in stimulus support.

The US Chamber of Commerce called it “a lifeline for businesses that have been disrupted by the health and economic consequences of Covid-19”.

Fed boss Jerome Powell will give two days of congressional testimony from Tuesday, which observers will be following after he caused ructions on markets last week with a sobering warning about the economic outlook.

The announcement saw all three main indexes on Wall Street reverse early losses to end well up, and the gains filtered through to Asia.

Tokyo soared almost five per cent, getting an extra boost from a Bank of Japan move to ramp up aid for firms struggling with virus fallout.

Seoul surged more than five per cent and Sydney almost four per cent, while Hong Kong jumped 2.4 per cent and Shanghai more than one per cent.

Mumbai, Taipei and Manila were also more than one per cent up, Jakarta 3.2 per cent higher and Bangkok 2.5 per cent up. Wellington edged up 0.8 per cent.

London, Paris and Frankfurt all rose more than two per cent.

The Cambodia Securities Exchange index dipped 0.89 per cent, with all stock closing in the red except for Taiwanese-owned garment manufacturer Grand Twins International (Cambodia) Plc (GTI), which gained 8.02 per cent. Acleda Bank Plc (ABC) closed 1.27 per cent lower.

Jeffrey Halley, an analyst at New York, US-based Oanda Corp, said: “With the Federal Reserve back in business backstopping corporate credit, and printing money to lend to companies directly, it was immediately back to business-as-usual for the peak-virus, buy everything herd.”