Stocks in Canada and U.S. surge on stimulus bets after American jobless claims soar to record 3.2 million
|National Post 26 Mar 2020 at 10:10|
U.S. stock rose as investors speculated the $2 trillion rescue package poised to pass Congress will lessen the pandemic’s toll on the economy.
The S&P 500 jumped almost 2 per cent at the open, headed for its first three-day rally since February. Treasuries held gains and the dollar fell for a third day.
Jobless claims surged to a record 3.28 million Americans last week as businesses shut down to help prevent the spread of the virus. While the reading exceeded estimates, aid is on the way from the U.S. government to help offset the impact on workers and businesses. Federal Reserve Chairman Jay Powell also sought to assure traders that the central bank wouldn’t run out of crisis-fighting ammunition.
“It’s no secret that times will be tough on the jobs front for the foreseeable future,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “The real question at hand now is if the current stimulus package is enough to give Americans the support they need.”
The claims data is one of the first major reports to show the extent of the damage to the American economy since states around the country began widespread business shutdowns aimed at preventing the coronavirus from spreading.
Canada’s main stock index gained at the open on Thursday, after Ottawa legislators voted to almost double the value of an aid package to help people and businesses deal with losses from the coronavirus outbreak.
Ottawa handed out a package worth $52 billion, up from an initial $27 billion outlined last week.
The Toronto Stock Exchange’s S&P/TSX Composite index opened up 109.27 points, or 0.83 per cent, at 13,248.5.
The Dow Jones Industrial Average rose 267.83 points, or 1.26 per cent, at the open to 21,468.38. The S&P 500 opened higher by 25.73 points, or 1.04 per cent, at 2,501.29, while the Nasdaq Composite gained 77.91 points, or 1.06 per cent, to 7,462.21 at the opening bell.
Stocks were lower around the world before the claims data, as investors started to look past stimulus packages to the mounting human impact of the coronavirus outbreak. The U.S. death toll from the pandemic topped 1,000. Government bonds and the yen advanced.
European sovereign debt rose after the region’s central bank announced it will scrap limits on bond purchases for its emergency program, a landmark decision that gives it almost unlimited firepower to fight the economic fallout from the virus. The euro strengthened as a gauge of the dollar headed for a third day falling.
The rescue measures across major economies are unprecedented, yet traders remain cognizant of the virus’s escalating toll. The world’s cases now top 451,000 with more than 20,000 deaths.
“Investors need to remain vigilant about how the growth rate of new cases develops and how governments respond going forward,” said Oliver Blackbourn, a multi-asset portfolio manager at Janus Henderson Investors. “The support package should help to assuage the fears about the worst possible economic outcomes for individuals and companies.”
Elsewhere, oil declined after three days of gains. Gold fluctuated. Emerging-market shares and currencies climbed.