Global Stocks Edge Up as China Takes Steps to Contain Outbreak

Date : 01/22/2020 @ 2:17PM
Source : Dow Jones News

Global Stocks Edge Up as China Takes Steps to Contain Outbreak

By Anna Isaac 

Global stocks edged up on Wednesday as investors cheered Chinese authorities' measures to contain the outbreak of a potentially deadly virus.

Futures tied to the Dow Jones Industrial Average rose 0.2%. The pan-continental Stoxx Europe 600 was largely flat, while Hong Kong's Hang Seng Index ended the day 1.3% higher.

Hospitals are stepping up preventive measures, Chinese officials said at a media briefing in Beijing. Authorities are recommending people not go into or out of Wuhan, the central Chinese city where the virus originated. Ministries and local governments are also arranging refunds on plane and train tickets, banning tourist groups from Wuhan, and organizing coverage of medical expenses, analysts at Everbright Sun Hung Kai said in a note.

Investors have a high degree of confidence in the Chinese government's ability to contain the virus, said James Athey, senior investment manager at Aberdeen Standard Investments.

"The global macroeconomic impact of this virus in Asia, based on what we know now, is likely to be very small," Mr. Athey said. "And secondly, irrespective of the macro response, the market has been trained to buy dips and it's done that today."

Ahead of the New York open, shares in International Business Machines rose almost 4% in offhours trading after the technology giant unexpectedly reported a slight gain in fourth-quarter revenue, ending a streak of declines, after markets closed Tuesday.

In Europe, yields on Italian government bonds rose sharply after reports suggested Luigi Di Maio, a key member of the country's ruling coalition, may step down. Mr. Di Maio's resignation could trigger snap elections within the next six months, said Florian Hense, economist at Berenberg Bank.

"Investors don't like uncertainty, but that's very much the short-term response," said Mr. Hense. "The issue with Italy is that it's a time bomb. If there's a global recession in the next 2-3 years, Italy would be a prime candidate for a debt crisis."

The yield on the 10-year Italian benchmark climbed to 1.468% before easing back to 1.376%. It was the largest intraday move since August 2019, according to Tradeweb. Shares in Italian banks also fell, with Milan-based Banco BPM dropping 3.4%, while UniCredit fell roughly 3.3%.

Among European equities, Amundi was one of the biggest gainers. Europe's largest asset manager rose about 3% in Paris after it agreed to buy Sabadell Asset Management for EUR430 million ($476 million) in cash to strengthen its business in Spain.

Later in the day, the U.S. National Association of Realtors will also release figures for sale of existing homes in December. Low borrowing costs and wage growth have helped to bolster the housing sector in the past few months.

Write to Anna Isaac at anna.isaac@wsj.com

 

(END) Dow Jones Newswires

January 22, 2020 09:02 ET (14:02 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.


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