U.S. Futures Climb With Europe Stocks; Bonds Slip: Markets Wrap
NEW YORK (Capital Markets in Africa) – U.S. equity-index futures gained along with European stocks on Wednesday and crude oil rallied amid signs the spread of the coronavirus in China is slowing and investor optimism the global economy can weather the storm. Treasury yields edged higher.
Contracts on all three major American gauges pointed to a firm open after China’s Hubei province reported the lowest number of new virus cases this month and suspected infections on the mainland fell. Carmakers and miners led the advance in the Stoxx Europe 600 Index, even as data showed a deep slump in euro-area industrial output at the end of last year. Asia saw gains for most equity benchmarks, with those in Shanghai and Hong Kong outperforming.
Oil climbed back above $50 a barrel in New York, holding the advance even after OPEC slashed forecasts for global demand. Raw materials including copper and iron ore gained, while core European bonds tracked Treasuries lower. Gold and the yen also slipped. New Zealand’s dollar jumped the most in two months after its central bank said the impact from the virus will be short-lived and it doesn’t project a need for rate cuts this year.
Sentiment has improved as confidence among some investors grows that the impact of the coronavirus outbreak will ultimately prove short-lived. President Xi Jinping vowed China would meet its economic goals while winning the battle against the virus that has now claimed 1,115 lives, while Federal Reserve Chairman Jerome Powell said on Tuesday the central bank is keeping a close eye on fallout from the epidemic.
“An air of relief has permeated global markets following a sustained decline in the rate of new coronavirus cases, diminishing the risk premium,” said Nema Ramkhelawan-Bhana, an economist at Firstrand Bank Ltd. in Johannesburg. “The absolute impact on economic growth is yet to be quantified, but markets appear more confident that its effects will be limited to the first quarter. The efforts of Chinese policymakers will prop up growth.”
Meanwhile, peripheral European bonds bucked declines and the yield on 10-year Greek debt dropped below 1% for the first time.
Source: Bloomberg Business News