Global Markets Follow U.S. Higher
April 07 2020 - 5:54AM
Dow Jones News
By Xie Yu and Anna Hirtenstein
Global stocks extended gains Tuesday as early indications that
the spread of the coronavirus pandemic was slowing helped buoy
markets.
Stock futures tied to the Dow Jones Industrial Average index
rallied 2.8%, a day after the blue-chips index jumped almost 8%.
The pan-continental Stoxx Europe 600 advanced 3%, and major Asian
stock benchmarks closed higher.
Authorities have warned that the coronavirus infections are
likely to peak in the coming week in both the U.S. and the U.K.
Meanwhile, other hard-hit countries in Europe including Italy and
Spain have reported a slowdown in new infections following strict
containment measures, leading to speculation that lockdowns may be
eased in a few weeks.
"It's hard to reject the view that things are improving. Markets
have been celebrating this in the last couple of days," said Paul
O'Connor, head of multiasset at Janus Henderson.
Still, markets are likely to remain turbulent, he said.
"Uncertainty really compresses investors' time horizons and
basically means that people are reacting to whatever's in front of
them at the moment," according to Mr. O'Connor.
The yield on the 10-year U.S. Treasury note rose to 0.742%, from
0.675% Monday.
Oil prices also ticked higher, with the global benchmark Brent
crude advancing almost 2% to trade at $33.64 a barrel.
The spread of the virus in the U.S. is a crucial variable for
investors, with more than a quarter of global cases now there,
according to Paul Hsiao, an economist at PineBridge Investments.
Investors will focus on the effectiveness of health-care policy, as
well as fiscal and monetary responses, he said.
Later in the day, the eurozone's finance ministers are scheduled
to hold a meeting to discuss a plan for collective aid to prop up
the bloc's economy. While Germany has historically disagreed with
issuing common debt, leaders are expected to discuss other means of
channeling funds to the continent's worst-hit areas.
A key question is whether leaders will agree to transfer capital
from Europe's richer nations to the poorer ones, or if they will
help arrange cheap loans that will add to the debt pile of
vulnerable countries such as Italy, said Peter Schaffrik, global
macro strategist at RBC Capital Markets. "I'm more hopeful than
I've ever been that proper transfers could come about, the
situation is so dire," he said.
In Asia, major markets closed higher on Tuesday. Japan's Nikkei
225 and China's Shanghai Composite both rose 2% Tuesday.
"People are trying to identify risks and opportunities now,"
said Bruce Pang, head of macro and strategy research at China
Renaissance Securities. The outbreak's arc in China shows that the
new coronavirus and measures to contain it would lead to slower
growth, rising unemployment, sluggish demand, disrupted supply
chains and more defaults, he cautioned.
At the same time, "China's case shows when new infections peaked
out, the market would bottom out," and this is what global
investors now expect, Mr. Pang added.
Write to Xie Yu at Yu.Xie@wsj.com and Anna Hirtenstein at
anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
April 07, 2020 05:39 ET (09:39 GMT)
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