U.S. Stocks Open Higher as China Pledges to Support Businesses
February 19 2020 - 10:05AM
Dow Jones News
By Joe Wallace
U.S. stocks opened higher Wednesday after China launched fresh
measures to support local businesses that are struggling because of
the coronavirus outbreak.
The Dow Jones Industrial Average rose 104 points, or 0.3%, to
29337 shortly after the opening bell. The S&P 500 also added
0.3% and the Nasdaq Composite climbed 0.6%.
The recovery in stocks came after China's Ministry of Industry
and Information Technology said the government would connect
factories with technology companies to identify weak links in their
supply chains. The assistance is one of several steps that Beijing
and local Chinese authorities have taken to limit the economic
fallout of the coronavirus, which has sickened around 75,200 people
world-wide and killed more than 2,000.
Investors are taking comfort from the measures to support
businesses as well as a fall in the number of new cases of the
virus being confirmed each day, according to Lyn Graham-Taylor, a
rates strategist at Rabobank. However, he added that many were
grappling with high levels of uncertainty about the economic toll
of the epidemic, and pointed to mixed reports on whether people are
going back to work.
"We're in this weird phase at the moment where we're in a little
bit of a holding pattern because of the nature of the information
coming out of China," said Mr. Graham-Taylor said.
With official Chinese manufacturing data not due to be published
until Feb. 29, investors are relying on other measures to assess
the economic impact of the illness. Some of these gauges point to a
steep decline in activity. Major energy producers have consumed a
third less coal each day in February than normal seasonal patterns
would suggest, economists at Goldman Sachs Group said in a
note.
In Europe, shares in clothing and consumer-goods companies were
among the best performers as the Stoxx Europe 600 rose 0.6%.
Japan's Nikkei 225 closed 0.9% higher amid a broad advance in
Asia.
Stock markets in the U.S. and Europe are hovering near all-time
highs despite the disruption caused by the outbreak because fund
managers expect Beijing to boost the economy with stimulus
policies, said Lewis Grant, a portfolio manager at Hermes
Investment Management.
"'There will always be someone to save us' -- that is the
outlook from investors at the moment," Mr. Grant said. Hermes
invests in two of the sectors that are most exposed to the outbreak
-- cruise providers and airlines -- but for now has decided not to
sell any of these shares.
Confidence that Beijing can contain the economic fallout from
the epidemic spilled over into currency markets. The Japanese yen,
seen as a haven, fell 0.7% to trade at Yen110.6 against the
dollar.
Brent-crude oil prices rose 1.5% to $58.63 a barrel after the
Trump administration blacklisted a trading brokerage owned by
Russian oil giant Rosneft, which the U.S. said has helped Venezuela
export crude. The sanctions could reduce Venezuelan oil exports by
up to half a million barrels a day, reducing global supplies,
according to Helge Andre Martinsen, an energy analyst at Norway's
DNB Bank.
Later in the day, investors will have an opportunity to scour
minutes of the Federal Reserve's most recent monetary-policy
meeting for details on policy makers' outlook for interest rates as
well as measures designed to ease strains in money markets.
--Liyan Qi contributed to this article
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
February 19, 2020 09:50 ET (14:50 GMT)
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