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)

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