Stocks Climb on Central Bank Hopes; Oil Rebounds: Markets Wrap

(Bloomberg) — The worst stock rout since the global financial crisis showed signs of easing on Monday amid optimism that central banks will help cushion markets from the impact of the coronavirus. rebounded.

The Index jumped, with 17 of 19 industry sectors in the green, and futures for all three main American indexes advanced in the wake of a rare statement from the Federal Reserve that opened the door to a rate cut based on the “evolving risks” posed by the outbreak. The The Bank of Japan hinted at easing, and the Bank of England pledged to “ensure all necessary steps are taken to protect financial and monetary stability.”

Money market traders expect the European Central Bank to ease rates by 10 basis points in April as policy maker Francois Villeroy de Galhau said more could be done if needed. Most European bonds gained, tracking Treasuries as they rallied for an eighth day. The dollar slipped as the euro strengthened.

Investors appear to be encouraged that policy makers will act after fears about the spreading virus drove the S&P 500 Index to its worst week since 2008. China’s CSI 300 Index rose more than 3% even after the nation saw a much deeper contraction in manufacturing than economists had anticipated. Germany’s finance ministry is exploring ways to loosen deficit limits that may pave the way for higher spending to boost Europe’s biggest economy.

“We’ll start to see more rhetoric from governments to address the situation both from a fiscal and central bank easing standpoint,” said Damien Loh, chief investment officer at Ensemble Capital Pte in Singapore. “We might see one leg of risk-off but it feels to me most of the bad news has been priced in.”

The global death toll from the virus has surpassed 3,000, with the number of U.S. cases climbing over the weekend, including the first positive test for a person in New York State, while cases in Italy and South Korea jumped. U.S. President Donald Trump is set to meet with pharmaceutical industry executives at 3 p.m. Washington time Monday.

Elsewhere, Australian and New Zealand 10-year bond yields hit fresh record lows. The Mexican peso tumbled about 1% after President Trump said he is considering increased controls on the border since Mexico reported its first coronavirus case.

Here are some key events coming up:

• A key factory gauge on Monday is projected to show that U.S. manufacturing came close to stagnating last month. The ISM purchasing managers index is estimated to fall to 50.5 from 50.9.
• The Reserve Bank of Australia sets policy on Tuesday.
• U.S. citizens in states including California and Texas will vote on “Super Tuesday” for a Democratic candidate to run against President Donald Trump in November’s election.
• The Bank of Canada has a rate decision on Wednesday.
• OPEC ministers gather in Vienna on March 5-6.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index jumped 1.4% as of 9:29 a.m. London time.
• Futures on the S&P 500 Index advanced 1.6%.
• futures climbed 1.8%.
• The U.K.’s surged 2.4%.
• The MSCI Asia Pacific Index increased 0.9%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%.
• The euro climbed 0.4% to $1.1075.
• The British pound dipped 0.5% to $1.2759.
• The Japanese yen was little changed at 107.94 per dollar.
• The South Korean Won strengthened 1.8% to 1,193.57 per dollar.

Bonds

• The yield on 10-year Treasuries decreased five basis points to 1.10%.
• The yield on two-year Treasuries decreased 15 basis points to 0.76%.
• Germany’s 10-year yield fell two basis points to -0.63%.
• Australia’s 10-year yield declined one basis point to 0.808%.

Commodities

• West Texas Intermediate crude surged 2.9% to $46.04 a barrel.
• Iron ore surged 6.2% to $87.40 per metric ton.
• LME advanced 0.8% to $5,681.50 per metric ton.
• LME aluminum gained 0.8% to $1,708 per metric ton.

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