U.S. Stock Futures Rebound, Oil Surges
April 02 2020 - 5:46AM
Dow Jones News
By Joe Wallace and Chong Koh Ping
U.S. stock futures recovered ground Thursday, while oil prices
surged on hopes of an end to the Saudi Arabia-Russia price war.
Contracts tied to the S&P 500 rose 1.9%, suggesting the
blue-chip index may recover some of its losses when trading gets
under way in New York. U.S. equities endured their worst start to a
new quarter on record on Wednesday. The Stoxx Europe 600 index
ticked up 0.4%, led higher by a jump in shares of energy
companies.
Brent-crude, the global benchmark for oil, jumped 8.7% to $26.93
a barrel after President Trump said he was confident Saudi Arabia
and Russia would resolve their dispute in coming days. Market
sentiment was also buoyed on a Bloomberg News report that China
plans to buy crude for its strategic reserves, analysts said.
A combination of eroding demand, driven by the sharp slowdown in
economic output as countries grapple with the coronavirus pandemic,
and a flood of new supply recently pushed U.S. crude-oil prices
close to their lowest level since 2002.
Traders are increasingly optimistic that major producers will
intervene in the oil market to bolster prices, according to DNB ASA
analyst Helge Andre Martinsen. However, the pandemic's impact on
the economy means the oil market will be significantly oversupplied
in the coming months regardless of whether producers cut back
output, Mr. Martinsen cautioned.
U.S. government bonds rallied in a sign that investors are
seeking assets they perceive to be the safest. The yield on 10-year
Treasury notes slipped to 0.608%, from 0.630% Wednesday. Yields
drop when bond prices climb,
The Federal Reserve on Wednesday eased rules around how banks
account for their supersafe assets, easing capital constraints for
lenders. The steps are also aimed at preventing trading hiccups in
the market for U.S. government bonds, and easing credit flow.
"Investors are once again flocking to the safety of Treasurys,"
said Colin Low, senior macro analyst at FSMOne.com in Singapore.
"The mini-rally seen last week was a typical relief rally that was
seen in previous bear markets such as in 2008 and 2000. The
economic situation in many markets is going to be uglier, as more
data come in."
The pandemic's toll on the U.S. economy is likely to become
clearer Thursday when the Labor Department releases weekly data on
new unemployment claims. Around six million people may have filed
for unemployment benefits in the week through March 28, according
to economists at Goldman Sachs Group. That would be almost double
the highest number on record, set the previous week.
Asian stock markets ended Thursday with a mixed performance. The
benchmark in Japan lost 1.4%, while China's Shanghai Composite rose
1.7%.
The pandemic has infected more than 935,000 people globally and
killed more than 47,000. The death toll in the U.S. surpassed
5,100, as confirmed cases climbed to over 215,000. The World Health
Organization has warned that the number of infected could top one
million in a few days.
"Globally, as a whole, the Covid-19 situation is worsening,"
said Mr. Low at FSMOne.com, referring to the illness caused by the
novel coronavirus. "Investors are getting more panicky. They are
fully aware that corporate earnings and the global economy will be
bad for the first and second quarters. But beyond that, there's no
visibility on how these numbers will look like in the third and
fourth quarter because of the fluidity of the Covid situation," he
said.
--Frances Yoon contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com and Chong Koh Ping
at chong.kohping@wsj.com
(END) Dow Jones Newswires
April 02, 2020 05:31 ET (09:31 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.