Stocks climb on oil price surge despite grim U.S. jobs data

NEW YORK (Reuters) – World equity markets climbed on Thursday on a surge in risky assets like oil, offsetting concerns over an increasing death toll from the coronavirus pandemic that is expected to push the global economy into recession.

Investors sought the safety of the U.S. dollar and government bonds. Stocks and oil futures were among the few risk assets that advanced, with oil benchmarks surging 20% after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war.

MSCI’s gauge of stocks across the globe rose 1.20% after broad declines in Japan. European shares also rose 0.42% despite data showing U.S. weekly jobless claims jumped to a record 6.6 million, double the record from the previous week.

At the close of trading on Wall Street, the Dow Jones Industrial Average rose 469.93 points, or 2.24%, to 21,413.44, the S&P 500 gained 56.4 points, or 2.28%, to 2,526.9 and the Nasdaq Composite added 126.73 points, or 1.72%, to 7,487.31.

“Most of the selling was done yesterday in anticipation of the jobs number and investors were looking for entry points as everyone expected it to be bad and they have been,” said Jamie Cox, managing partner of Harris Financial Group in New York.

“A lot the trading has been on fixed income because if oil prices stabilize, that will stabilize the bond market and will feed through to reduced default risk.”

Investors sought the perceived safety of government bonds. Benchmark U.S. 10-year notes last rose 3/32 in price to yield 0.6251%, from 0.635% after trading hours on Wednesday.

The World Health Organization said the global case count would reach 1 million and the death toll 50,000 in the next few days. It currently stands at 46,906.

U.S. President Donald Trump, who had initially played down the outbreak, told reporters at the White House on Wednesday that he is considering a plan to halt flights to coronavirus hot zones in the United States.

In currency markets, the dollar rose 0.632% against a basket of six major currencies after a gain of 0.53% overnight. The euro traded down 0.99% at $1.0853 as the dollar advanced.

Brent crude futures jumped 20.9% to $29.91. U.S. West Texas Intermediate (WTI) crude futures soared 21% to $24.73.

Trump said he had talked with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal within a “few days” to lower production, thereby bring prices back up.

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Asian shares hold on to gains but virus keeps markets on edge

TOKYO/NEW YORK (Reuters) – Asian stocks clung to gains on Wednesday, helped by a bounce in Australian shares, but risks for equities remain large as the coronavirus pandemic rattles the underpinnings of the global economy.

E-Mini futures for the S&P 500 traded 1.39% lower in Asian trade, highlighting the cautious mood.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.23%. Australian shares jumped by 2.87%, reversing a 2% decline on Tuesday, as a slowdown in new coronavirus cases and rising iron ore prices lifted the market.

Shares in China, where the coronavirus first emerged late last year, rose 0.18%, supported by hopes the world’s second-largest economy has started to recover.

China’s factory activity improved in March after plunging a month earlier, a private survey showed on Wednesday, just scraping into positive territory and beating analysts’ expectations.

Shares in South Korea, also hit hard by the virus, rose 0.19%, but Japanese shares fell 1.05% as a rapid increase in coronavirus infections in Tokyo fueled speculation the government will place the capital on lockdown.

Wall Street tumbled on Tuesday, with the Dow registering its biggest quarterly fall since 1987 and the S&P 500 its steepest quarterly drop since a decade ago on growing evidence of the massive downturn the pandemic will incur.

U.S. economic activity is likely to be “very bad” and the unemployment rate could rise above 10% because of efforts to slow the spread of the coronavirus, Cleveland Federal Reserve Bank President Loretta Mester told CNBC.

“Investors still want to buy equities, but the coronavirus is making everyone more cautious,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.

“There are still a lot of risks out there, but if you can identify individual shares with good dividend yields and strong financials, then you can buy at a pretty good price.”

MSCI’s gauge of stocks across the globe was little changed. The index fell nearly 22% for the quarter.

The number of coronavirus infections globally headed toward 800,000. Deutsche Bank analysts noted, however, that for two consecutive days the global growth in new cases was below 10%, having exceeded that rate for most of the past two weeks.

Health officials were much more cautious. A World Health Organization official warned that even in the Asia-Pacific region, the epidemic was “far from over.”

The dollar bounced in Asia, rising 0.28% to 107.86 yen and gaining 0.36% to $1.2375 per British pound as investors adjusted positions before the release of U.S. manufacturing data.

The dollar fell broadly on Tuesday after the U.S. Federal Reserve said it will allow foreign central banks to exchange their holdings of U.S. Treasury securities for overnight dollar loans to ease a dollar funding crunch.

The yield on the benchmark 10-year U.S. Treasury note eased slightly to 0.6554%.

U.S. crude held steady at $20.49 a barrel, but Brent crude fell 2.09% to $25.80 per barrel as the United States, Russia, and Saudi Arabia jostle over a massive oversupply of oil.

Crude oil benchmarks ended a volatile quarter with their biggest losses in history, with both U.S. and Brent futures hammered throughout March due to the pandemic and the eruption of a Saudi-Russia price war.

Global fuel demand has been cut sharply by travel restrictions due to the coronavirus. Forecasters at major merchants and banks see demand slumping by 20% to 30% in April, and for weak consumption to linger for months.

(Graphic: MSCI All Country Wolrd Index Market Cap link: here)

(Graphic: Global currencies vs. dollar link: here)

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World stocks rally after Chinese data boost to close worst quarter since 2008

LONDON (Reuters) – World stocks looked set to close their worst quarter since 2008 on a brighter note on Tuesday, as strong Chinese factory data held out hope for an economic revival even as much of the rest of the world shut down to fight the coronavirus.

Stocks have rallied since the start of last week but remain down more than 20% for the quarter. European shares have had an even worst time, suffering their worst three months since 1987.

But with trillions wiped off global markets in March and policymakers responding with more than $10 trillion and counting of fiscal and monetary stimulus packages, a semblance of calm has returned this week.

Some analysts have been bold enough to call a bottom in stocks and say the lows of early last week are unlikely to be revisited.

European stocks rallied at the open. The Euro STOXX .STOXXE gained 1.7%, France’s CAC 40 .FCHI 1.15% and the German DAX GDAX 2.08%. Britain’s FTSE 100 .FTSE rose 1.8%.

That followed gains in Asia after China’s official manufacturing purchasing managers’ index (PMI) rose to 52.0 in March from a record-low 35.7 in February, topping forecasts of 45.0.

Analysts cautioned that underlying activity probably remained below par, since the improvement measured the net balance of companies reporting an expansion or contraction, but markets cheered the news.

S&P 500 futures rose 0.6% ESc1, pointing to a stronger open on Wall Street after a rally on Monday lifted the U.S. index towards a 20% gain since the lows of last week.

Despite the more positive mood, not everyone is convinced the current rally has legs.

“In spite of the significant sell-off of most growth-oriented assets since mid-February, we are concerned there is further downside ahead,” said Salman Baig, an investment manager at Unigestion.

“The violent market action should not be understated, but the underlying cause – an accelerating pandemic requiring large parts of the economy to shut down – is still with us.”

The pace of coronavirus infections globally was heading towards 800,000. But Deutsche Bank analysts noted that for two consecutive days the global growth in new cases was 10%, after being well above that for most of the past two weeks.

Health officials are much more cautious. A World Health Organization official warned on Tuesday that even in the Asia-Pacific region the epidemic was “far from over”.

“This is probably the most embarrassing statistic for the West that China could possibly release. Not only did China stop the virus with just 3,309 deaths, they also appear to have done it with just a one-month shutdown of the economy,” Charlie Robertson, the chief economist at Renaissance Capital, said on Twitter.

Some analysts dispute China’s figures, however.

OIL BOUNCES

Elsewhere, oil prices rose off the 18-year lows hit on Monday after the United States and Russia agreed to talks to stabilize energy markets.

Oil prices have been hit by a double whammy, with U.S. crude at one point falling below $20 a barrel on Monday, as the virus outbreak cut demand worldwide and Saudi Arabia got into a price war with Russia.

Brent crude LCOc1 was up 43 cents, or 1.9%, at $23.19 a barrel, after closing on Monday at $22.76, its lowest finish since November 2002. nL4N2BO131

U.S. crude Clc1 was up $1.21, or 6.0%, at $21.30 a barrel, after settling in the earlier session at $20.09, its lowest since February 2002.

The dollar rose for a second day, although the gains were more controlled than the jumps of earlier this month that put severe stress on funding markets for the U.S. currency.

The dollar, measured against a basket of currencies, was up 0.3% at 99.493 =USD.

The euro dropped 0.4% to $1.0995 EUR=EBS. Sterling slipped 0.7% to $1.2330 GBP=D3. The yen was 0.5% lower against the dollar JPY=EBS.

Analysts say investors rebalancing their portfolios at month-end and quarter-end were probably behind some of the dollar’s moves over the next 24 hours.

There was little respite for emerging-market currencies, however. The South African rand ZAR= was near record lows and Latin American currencies were falling once again.  

Bond market moves were more measured than in recent weeks. Italian government bond yields IT10YT=RR were steady before an auction of debt, amid hopes the country’s efforts to contain the spread of the coronavirus may be starting to work.

German benchmark 10-year yields rose 5 basis points to -0.474% DE10YT=RR. U.S. Treasury yields gained 2 to 4 bps, as investors sold safer bonds and bought into equities.  

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GLOBAL MARKETS-Stocks down on virus' economic toll; dollar falls further

* USD on track for largest weekly loss since 2009

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh (Updates to market close, adds stimulus signed into law)

By Rodrigo Campos and Koh Gui Qing

NEW YORK, March 27 (Reuters) – Stocks across the globe fell on Friday after a historic three-day run-up, as skittish investors kept indices on track for their worst monthly and quarterly performances since 2008, while the dollar fell by the most in any week since 2009.

Shares on Wall Street ended near Friday’s lows and the dollar fell further after the U.S. House of Representatives, as expected, approved a $2.2 trillion stimulus package, the largest in U.S. history. After the markets closed, President Donald Trump signed the bill into law.

The dollar’s slump was seen partly as a sign that central bankers have been successful in easing stress in the money markets.

Market volatility is expected to persist as the coronavirus pandemic that triggered closures in economies worldwide remains very much a threat.

The United States surpassed two grim milestones as virus-related deaths soared past 1,200 and it became the world leader in confirmed cases. Worldwide, confirmed cases rose above 551,000 with nearly 25,000 deaths.

The stimulus “is not necessarily enough to make people say, ‘I’ve got to run out and buy stocks,’” said Rick Meckler, a partner at Cherry Lane Investments in New Jersey. “That’s going to take more time.”

Uncertainty over the overall human and economic toll was reflected in financial markets. MSCI’s gauge of global stocks rallied by the most in any week since December 2008, but is also poised for its largest month- and quarter- drops since 2008, during the height of the financial crisis.

Nervous investors supported demand for gold, whose prices jumped by the most in any week since 2008 despite a Friday decline.

The coronavirus infection rate is driving much of the market at a time of great uncertainty, said Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York.

“My big hang-up here is when the curve does start to flatten, that doesn’t mean we can return to normal human and economic behavior,” he said.

“If we do return to normal human and economic behavior, we risk the chance the curve goes parabolic again. Just from the perspective of how long this potentially can last, there’s still a great deal of uncertainty.”

The Dow Jones Industrial Average fell 915.39 points, or 4.06%, to 21,636.78, the S&P 500 lost 88.6 points, or 3.37%, to 2,541.47 and the Nasdaq Composite dropped 295.16 points, or 3.79%, to 7,502.38.

The pan-European STOXX 600 index lost 3.26%, and MSCI’s gauge of stocks across the globe shed 2.39%. Emerging market stocks lost 1.03%.

Stock markets have rallied over the past week on trillions of dollars of economic stimulus enacted or pledged by policymakers worldwide, from central banks to governments. More may be needed as the virus slams the brakes on economic activity and increases healthcare spending.

“Next week, markets will likely continue to focus on the spread of COVID-19 – whether European cases are reaching a peak, how much of the U.S. will be put in lockdown, and whether China can avoid a second wave,” said Gaétan Peroux, strategist at UBS Global Wealth Management.

The $2.2 trillion stimulus package signed by Trump will flood the world’s largest economy with money to stem the economic damage from the pandemic.

Amid the avalanche of stimulus, the U.S. dollar extended its daily decline and posted its biggest weekly decline since early 2009. The dollar index fell 0.937% on Friday.

The euro was up 0.97% to $1.1135, the Japanese yen strengthened 1.49% versus the greenback at 108.00 per dollar, while sterling was last trading at $1.2447, up 2.02% on the day.

The U.S. currency’s fall after two weeks of steep gains suggests the Federal Reserve’s efforts to relieve a crunch in the dollar-funding market are working, some analysts said.

“What we are seeing is abating stress in the money markets. Action by central banks has been successful so far and a shortage of dollars has been taken off the table,” said Ulrich Leuchtmann, head of FX and EM research at Commerzbank.

U.S. Treasury yields posted a weekly decline, ending Friday near the day’s lows.

Benchmark 10-year notes last rose 1-9/32 in price to yield 0.6778%, from 0.808% late on Thursday. The 30-year bond last rose 3-24/32 in price to yield 1.2555%, from 1.395%.

Oil prices extended their fall on demand concerns as the virus slowed economies to a crawl, which outweighed the stimulus efforts. U.S. crude recently fell 3.98% to $21.70 per barrel and Brent was recently at $24.83, down 5.73% on the day.

Gold market participants remained concerned about a supply squeeze after a sharp divergence between prices in London and New York. The virus has grounded planes used to transport gold and closed precious metal refineries.

Spot gold dropped 1.0% to $1,613.02 an ounce. The metal posted its largest weekly advance since 2008.

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WRAPUP 2-TSX and Canadian dollar gain as economic aid encourages investors

 (Updates prices)
    * TSX gains 1.8% as Ottawa boosts stimulus
    * Canadian dollar rises 1% against the greenback
    * Loonie touches its strongest since March 17 at 1.4010
    * Canadian bond yields fall across the curve

    By Fergal Smith
    TORONTO, March 26 (Reuters) - Canada's main stock market
rallied for a third straight day and the loonie rose to a
nine-day high on Thursday as Ottawa tripled the size of a
mortgage securities buying program, with investors becoming more
impressed with the amount of economic aid.
    Canada said it was ready to buy C$150 billion of mortgage
securities, up from C$50 billion announced earlier this month,
to expand funding for lenders dealing with tighter credit
markets due to the economic impact of the coronavirus outbreak.
            
    On Wednesday, Canada almost doubled the value of an aid
package to C$52 billion to help people and businesses deal with
losses from the outbreak, while the Bank of Canada has cut its
key interest rate by a total of 100 basis points this month to
0.75%.             
    Some economists expect the central bank to cut rates to zero
and begin purchasing in large scale assets such as government
bonds.        
    "Fear over how long coronavirus containment measures could
last are starting to be offset by encouragement that fiscal and
monetary support measures are underway to support Canadians and
Canadian companies," said Colin Cieszynski, chief market
strategist at SIA Wealth Management.
    The Toronto Stock Exchange's S&P/TSX composite index
          ended up 1.8% at 13,371.17, its highest closing level
since March 13. The index has rebounded nearly 20% from Monday's
8-year low.
    The heavily-weighted financials group rallied 1.7%, while
industrials were up 3.3%.
    Wall Street also rallied as record weekly unemployment
benefit claims added to the case for more stimulus to combat the
economic impact of the coronavirus pandemic, while the U.S.
dollar        fell for a fourth straight day against a basket of
major currencies.             
    The Canadian dollar          was trading 1% higher at 1.4056
to the greenback, or 71.14 U.S. cents. The currency, which on
Wednesday notched its biggest gain in four years, touched its
strongest intraday level since March 17 at 1.4010.
    The price of oil, one of Canada's major exports,       
settled 7.7% lower at $22.60 a barrel as restrictions on travel
worldwide slashed fuel demand and the United States scrapped
plans to buy domestic oil for its emergency reserve.
            
    Canadian government bond yields fell across the curve in
sympathy with U.S. Treasuries. The 10-year             was down
5.2 basis points at 0.850%.

 (Reporting by Fergal Smith; editing by Nick Zieminski and
Alistair Bell)
  

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Asian markets cautiously await U.S. stimulus, jobs

SINGAPORE (Reuters) – Asian stock markets were poised for a cautious start on Thursday following two days of rallies, as investors await the passage and details of a $2 trillion stimulus package in the United States to address the economic fallout from the coronavirus.

Senators are set to vote on the plan later on Wednesday in Washington. The bill includes a $500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 each to millions of U.S. families.

It cannot come soon enough, with potentially enormous weekly U.S. initial jobless claims to appear in data due at 1230 GMT.

Markets in Australia and New Zealand began in the green, with the NZ50 up 3% and the S&P/ASX 200 up 2%.

Nikkei futures last traded 2% below the index’s cash close. Hong Kong futures were 1% higher and China A50 futures were up 0.2%.

“There has been so much stimulus thrown at this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney.

“But the positivity related to it is really just sentiment,” she said, adding that investors were largely flying blind with so many companies withdrawing earnings guidance. Jobless figures may offer a “reality check,” she said.

In perhaps an early sign of the fragile mood, the risk-sensitive Australian dollar dropped 1% and the safe-haven Japanese yen rose in morning trade. [FRX/]

U.S. stock futures traded slightly negative, following the first back-to-back session rises on Wall Street in over a month.

The Dow Jones Industrial Average rose 2.4% and the S&P 500 1.2%, while the Nasdaq Composite dropped half a percent following a Nikkei report that Apple was weighing a delay in the launch of its 5G iPhone.

JOBLESS CLAIMS TO TEST BOUNCE

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the U.S. government spends annually.

But it also comes against a backdrop of bad news as the coronavirus spreads and as jobless claims are set to soar, with both set to test the nascent bounce in markets this week.

California Governor Gavin Newsom told reporters on Wednesday that a million Californians had already applied for jobless benefits this month – a number that knocked stocks from session highs and has analysts bracing for worse to come.

RBC Capital Markets economists had expected a national figure over 1 million in Thursday’s data, but say “it is now poised to be many multiples of that,” as reduced hours across the country drive deep layoffs.

“Something in the 5-10 million range for initial jobless claims is quite likely,” they wrote in a note.

That compares to a 695,000 peak in 1982. Forecasts in a Reuters poll range from a minimum of 250,000 initial claims, all the way up to 4 million.

Trepidation seemed to put a halt on the U.S. dollar’s recent softness in currency markets, with the dollar ahead 1% against the Antipodean currencies and up 0.6% against the pound.

It slipped 0.3% to 110.85 yen.

U.S. crude slipped 1.5% to $24.11 per barrel and gold steadied at $1,608.14 per ounce.

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GLOBAL MARKETS-Stocks, gold surge on new stimulus from Fed, others

(Adds gold, oil settlement prices)

* Stocks rally in biggest single-day bounce in month

* Major indexes post best gains since 2008 financial crisis

* Investors relieved as Fed pledge eases bond stress

* Factory surveys show extent of economic damage

By Herbert Lash, Sujata Rao and Marc Jones

NEW YORK/LONDON, March 24 (Reuters) – Financial markets rebounded sharply on Tuesday, with a measure of global equities headed for its biggest bounce since the crisis erupted a month ago, while the safe-haven dollar recoiled as investors welcomed unprecedented global stimulus efforts.

Investors hoped the U.S. Federal Reserve’s offer of unlimited bond-buying would help avert a global depression with the help of other rescue packages, though it was not expected by itself to mitigate the devastating impact of the coronavirus.

The Fed’s action had failed to persuade Wall Street on Monday, with losses of 2%-3% on major indexes. But the mood improved on Tuesday as other governments and central banks stepped in and Congress readied a $2 trillion stimulus package to limit the economic fallout from the fast-spreading pandemic.

U.S. gold futures climbed as much as 6.7% to $1,672.60 an ounce as the moves by the Fed and others eased the need for cash and slashed the demand for dollars.

“The Fed’s measures are unprecedented, and they have been extremely proactive in preventing this external shock from morphing into a wider funding crisis,” said Vasileios Gkionakis, head of FX strategy at Lombard Odier.

U.S. and European stocks jumped 6% or more and the dollar index, a basket of major trading currencies, slid.

MSCI’s gauge of stocks across the globe gained 7.00%, the largest single-day gain since equities tumbled from all-time highs a month ago.

The broad pan-European STOXX 600 index rose 8.40%, its strongest session since late-2008. The index is still down about 30% from a record peak hit in February.

German stocks jumped 11% and British blue chips added 9% as both bourses also posted their best sessions since the global financial crisis in 2008.

Europe’s so-called fear gauge fell to 52.53, its lowest in nearly two weeks, after spiking to 12-year highs earlier this month.

Emerging market stocks rose 6.04%.

On Wall Street, the Dow Jones Industrial Average rose 1,591.77 points, or 8.56%, to 20,183.7. The S&P 500 gained 158.39 points, or 7.08%, to 2,395.79 and the Nasdaq Composite added 429.93 points, or 6.27%, to 7,290.61.

The Fed also will expand its mandate to corporate and municipal bonds and backstop a series of other measures that analysts estimate will deliver more than $4 trillion in loans to non-financial firms.

Other countries unveiled their own measures. South Korea’s ravaged market climbed 8.6% after the government doubled a planned economic rescue package to 100 trillion won ($80 billion).

In China, mainland stocks posted their biggest gain in three weeks of almost 3%, while Japan’s Nikkei soared 7%, its biggest daily gain in four years.

Still, investors remained wary, as the number of coronavirus infections topped 350,000 and new infections brought in from abroad rose in China.

Business activity collapsed from Australia and Japan to Western Europe at a record pace in March, as measures to contain the coronavirus hammered the world economy, and Japan said it was postponing the Olympics.

IHS Markit’s flash composite Purchasing Managers’ Index (PMI) for the euro zone, seen as a good gauge of economic health, plummeted to a record low of 31.4 in March, in the biggest one-month fall since the survey began in 1998.

With no resolution to the pandemic and not enough visibility into the depth of the economic downturn, it’s too early to call the end to the market’s rout, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

“The answer is still, ‘you got to get it under control,’” Saluzzi said about the coronavirus. “Everybody keeps saying it’s going to get worse before it gets better, so the markets are going to remain choppy and volatile.”

The government and central bank financial support helped calm nerves in bond markets, where yields on two-year U.S. Treasuries hit their lowest since 2013.

The benchmark 10-year U.S. Treasury note fell 15/32 in price to yield 0.8148%.

Germany’s 10-year yield was up 2 basis points on the day at -0.36%, compared with a 4 bps rise before the purchasing managers index (PMI) releases, all small moves when compared to record lows hit at -0.90% earlier in March.

ALL ABOUT THE ECONOMY

The impact of the virus on the global economy is evident in a series of growth forecast downgrades and advance readings of PMIs across the world’s biggest economies.

German activity plunged to the lowest since the 2009 crisis, driven by a record services contraction, while French activity hit all-time lows. Japan posted its biggest-ever services fall.

However, the prospect of massive Fed funding pushed the greenback 0.26% lower against rivals, off three-year peaks , falling against the yen and sliding 1% versus the euro.

Brent futures rose 12 cents to settle at $27.15 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 65 cents to settle at $24.01.

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