Stocks jump as virus deaths slow; oil falls on OPEC+ delay
NEW YORK (Reuters) – World stock markets jumped on Monday, encouraged by a slowdown in coronavirus-related deaths and new cases in some of the world’s hot spots, while a delay in talks between Saudi Arabia and Russia to cut supply sent oil prices tumbling again.
Equities investors were encouraged as the 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 number of new hospitalizations and other data suggest a possible plateau in the crisis.
Signs of stabilization in New York are “probably the most important thing given the amount of capital that’s controlled through managers that live in the area,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York, before Cuomo’s update.
“It’s a tremendous relief for the market (but it’s) not to say that we’re through the woods yet, because we’re going to have a tough week or two ahead.”
Still providing cause for worry, the number of new coronavirus cases jumped in China on Sunday, days after Singapore, which had won international praise for its handling of the virus over the last few months, had to close schools and most workplaces.
Investor morale in the euro zone fell to an all-time low in April and the currency bloc’s economy is now 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.
However, the 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 1,167.04 points, or 5.54%, to 22,219.57, the S&P 500 gained 137.83 points, or 5.54%, to 2,626.48 and the Nasdaq Composite added 401.20 points, or 5.44%, to 7,774.28.
The pan-European STOXX 600 index rose 3.73% and MSCI’s gauge of stocks across the globe gained 4.67%.
Emerging market stocks rose 2.73%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.81% 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.
“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.
Graphic – Coronavirus vs world stocks: here
OIL RESUMES DECLINE
U.S. crude dropped sharply following two sessions of double-digit gains after Saudi Arabia and Russia, which have been at odds this year over production, postponed a meeting of the Organization of the Petroleum Exporting Countries and its allies, or OPEC+, until Thursday instead of on Monday. [O/R]
“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 also said Moscow was ready to coordinate with other oil exporting countries to help stabilize the market and that the OPEC+ meeting was delayed for technical reasons.
But Bjornar Tonhaugen, Rystad Energy’s head of oil markets, said even if the group agreed to cut up to 15 million bpd, “it will only be enough to scratch the surface of the more than 23 million bpd supply overhang predicted for April 2020.”
U.S. crude fell 6% to $26.64 per barrel and Brent was at $32.57, down 4.51% on the day.
JAPAN IN STATE OF EMERGENCY
In currency markets, the yen weakened 0.53% versus the greenback at 109.09 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 recovered, having fallen 0.4% overnight after British Prime Minister Boris Johnson was admitted to hospital for tests as he was still suffering symptoms of the coronavirus.
The euro was down 0.1% to $1.0797 and Sterling was last trading at $1.2308, up 0.39% on the day.
The dollar index fell 0.129%.
Yields on safe-haven U.S. government bonds crept higher in fixed income markets, a reflection of 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.”
Benchmark 10-year notes last fell 24/32 in price to yield 0.6635%, from 0.589% late on Friday. The 30-year bond last fell 1-8/32 in price to yield 1.2608%, from 1.216%.
Despite the stocks rally, gold prices touched a more than three-week high. Spot gold added 2.0% to $1,648.96 an ounce.
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