Global Stocks Decline After Oil Price Jump
April 03 2020 - 4:03AM
Dow Jones News
By Anna Hirtenstein and Chong Koh Ping
Stock markets around the world fell Friday, as investors weighed
early indications of the coronavirus's effects on the U.S. labor
market, and prospects for a sustained recovery in oil prices.
U.S. futures edged down, with securities tied to the Dow Jones
Industrial Average declining 0.8%.
In Europe, the pan-continental Stoxx Europe 600 slid 0.2%.
Brent crude, the global gauge of oil prices, retreated slightly
to trade at $29.87. On Thursday it leapt 21%, marking its largest
one-day percentage gain on record, based on data going back to
1988.
President Trump said Thursday he expected Russia and Saudi
Arabia to agree to cut production. Moscow denied talking to the
Saudis, but Saudi officials said the kingdom would consider
substantial output cuts if other nations joined the effort.
"The oil situation is going to remain quite dicey," said Eddy
Loh, senior investment strategist at Maybank Group Wealth
Management in Singapore. "While we see some negotiation
breakthroughs this week, negotiations can come on and off.
Fundamentally there's a shock to global oil demand."
The yield on the 10-year U.S. Treasury note fell to 0.607%,
after settling at 0.624% in the previous session. Bond yields fall
as prices rise.
In Asia, major stock indexes were largely flat. The Shanghai
Composite Index closed down less than 1%.
Globally, the number of confirmed cases of the novel coronavirus
topped 1 million, with a death toll of more than 53,000. The U.S.
reported more than 245,000 infections and nearly 6,000 deaths,
according to Johns Hopkins University.
Mr. Loh said all eyes were on how long the containment measures
rolled out by the U.S. and other countries would last. A record 6.6
million Americans applied for unemployment benefits last week --
double the number two weeks ago -- as the country shut down parts
of the economy in an effort to contain the virus.
"The longer the lockdown, the larger the damage. The fear now is
the rise of corporate bankruptcies," Mr. Loh said. "We'll be
tracking very closely whether the liquidity crisis will become a
credit crisis. And the U.S. will be the key driver here."
On Thursday, the Dow Jones Industrial Average rose 2.2% and the
S&P 500 and the Nasdaq Composite were up 2.3% and 1.7%
respectively.
Despite the apparent calm Friday, Kerry Craig, a global market
strategist at JP Morgan Asset Management, said he expected the
markets to remain choppy in the near future.
"A cycle of corporate [earnings] downgrades has yet to come
through," he said, adding that consensus expectations weren't yet
fully reflecting the impact of the pandemic.
Investors are awaiting the U.S. unemployment report for March,
which will be released later in the day. It is expected to mark the
first time since 2010 that employers shed more workers than they
added. The ISM's nonmanufacturing survey for last month will also
show the impact of social distancing on U.S. service providers.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Chong
Koh Ping at chong.kohping@wsj.com
(END) Dow Jones Newswires
April 03, 2020 03:48 ET (07:48 GMT)
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