U.S. Stocks Climb as China Pledges to Support Businesses
February 19 2020 - 10:41AM
Dow Jones News
By Joe Wallace
U.S. stocks rose Wednesday after China launched fresh measures
to support local businesses that are struggling because of the
coronavirus outbreak.
The Dow Jones Industrial Average gained 0.2%, rising after three
consecutive days of declines. The S&P 500 rose 0.4% and the
Nasdaq Composite jumped 0.7%.
Global stocks rose as well. In Europe, shares in clothing and
consumer-goods companies were among the best performers as the
Stoxx Europe 600 rose 0.8%. Japan's Nikkei 225 closed 0.9% higher
amid a broad advance in Asia.
The recovery in global 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 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.
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.
Among individual stocks, shares of Groupon plunged 39% after the
company reported weak fourth-quarter earnings, said it planned to
shut down the part of its business that sells merchandise, and
detailed plans for a reverse stock split.
Shares of Garmin rose 7.6% after the maker of sports devices
reported that a key measure of fourth-quarter profit beat analysts'
expectations, with the stock at a 10-year high.
Confidence that Beijing can contain the economic fallout from
the epidemic spilled over into currency markets. The Japanese yen,
seen as a haven, fell 0.9% against the dollar.
Oil prices rose 1.4% to $53.04 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.
--Paul Vigna and Liyan Qi contributed to this article
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
February 19, 2020 10:26 ET (15:26 GMT)
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