Stocks jump as virus deaths slow; oil falls after OPEC+ delay
|reuters.com 06 Apr 2020 at 16:09|
The U.S. dollar was little changed against a basket of peers while sterling turned negative versus the greenback and euro after news that UK Prime Minister Boris Johnson was moved to intensive care as he grew sicker with Covid-19.
Equities investors were encouraged by a slower death toll from the virus slowed across major European nations, including France and Italy.
In New York State, Governor Andrew Cuomo said that despite an increase in the number of cases and deaths, a daily decline in new hospitalizations and other data suggested a possible plateau in the crisis.
“It is definitely not going to be a one-way street but this potentially could be a turning point, we are starting to get some good news and hopefully that trend will continue,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
“But that is not to say it is going to be a smooth path. We all know from the recovery we experienced after the 2008 financial crisis there is always a potential for a negative development to cause the market to pull back again.”
U.S. officials have braced the country for a “peak death week” from the pandemic, with the death toll topping 10,000.
The economy will still feel effects of the measures taken to slow the spread of the virus. Investor morale in the euro zone fell to an all-time low in April and the currency bloc’s economy is in deep recession due to the coronavirus, which is “holding the world economy in a stranglehold,” a Sentix survey showed.
“Never before has the assessment of the current situation collapsed so sharply in all regions of the world within one month,” Sentix Managing Director Patrick Hussy said.
Still, markets appeared hopeful.
“What is driving the market is the evidence that the number of new cases has started to turn the corner,” said Elwin de Groot, Rabobank’s head of macro strategy.
The Dow Jones Industrial Average rose 1,351.69 points, or 6.42%, to 22,404.22, the S&P 500 gained 152.42 points, or 6.12%, to 2,641.07 and the Nasdaq Composite added 465.32 points, or 6.31%, to 7,838.41.
The pan-European STOXX 600 index rose 3.73% and MSCI’s gauge of stocks across the globe gained 4.95%.
Emerging market stocks rose 2.56%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.78% higher, while Japan’s Nikkei rose 4.24%.
“This still looks like a case of over-optimism,” said Marios Hadjikyriacos, investment analyst at online broker XM.
FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, April 3, 2020. REUTERS/Staff/File Photo
“A lot of uncertainty is still in the air and there is no clear timeline for when any of these economies will be reopened, which is the most important variable for markets.”
Markets in mainland China were closed for a public holiday.
U.S. crude dropped sharply following two sessions of double-digit gains after Saudi Arabia and Russia, at odds over production, postponed a meeting of the Organization of the Petroleum Exporting Countries and its allies, or OPEC+, until Thursday instead of Monday.
“Perhaps it is best that the meeting was delayed for producers to cement a minimum of common ground before the actual discussions take place on Thursday,” BNP Paribas analyst Harry Tchilinguirian said.
Kremlin spokesman Dmitry Peskov said Moscow was ready to coordinate with other oil exporting countries to help stabilize the market and the OPEC+ meeting was delayed for technical reasons.
The market was weighed down by a report from data provider Genscape that inventories at the Cushing storage hub in Oklahoma, the delivery point for WTI, rose by about 5.8 million barrels last week, traders said.
U.S. crude recently fell 7.41% to $26.24 per barrel and Brent was at $32.98, down 3.31% on the day.
In currency markets, the yen weakened 0.60% versus the greenback at 109.16 per dollar and weakened against other major currencies as Japanese Prime Minister Shinzo Abe said the government would declare a state of emergency as early as Tuesday to curb a spike in coronavirus infections.
The dollar gained ground against the euro while the pound slipped after news of Johnson’s move to the ICU.
The euro was down 0.15% to $1.0792 and Sterling was last trading at $1.2237, down 0.19% on the day.
The dollar index fell 0.01%.
Yields on safe-haven U.S. government bonds crept higher in fixed income markets, reflecting the slightly brighter tone in world stock markets.
Lou Brien, a strategist at DRW Trading in Chicago, said Wall Street’s upward trajectory was “the first and last reason why Treasuries are lower in price and higher in yield this morning.”
FILE PHOTO: A pump jack operates in front of a drilling rig at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford/File Photo
Benchmark 10-year notes last fell 25/32 in price to yield 0.6666%, from 0.589% late on Friday. The 30-year bond last fell 1-17/32 in price to yield 1.2705%, from 1.216%.
Despite the stocks rally, gold prices touched a more than three-week high. Spot gold added 3.0% to $1,664.87 an ounce.
Reporting by Rodrigo Campos; Additional reporting by Karen Pierog in Chicago, Karen Brettell, Chuck Mikolajczak and Scott DiSavino in New York, and Marc Jones in London; Editing by Dan Grebler, Nick Zieminski and David Gregorio