Stock Rebound Falters on Uncertain Stimulus Timing: Markets Wrap

(Bloomberg) — U.S. stocks rebounded from the worst rout since the financial crisis, though gains began to fade on questions over the timing for stimulus promised by the Trump administration to combat the effects of the spreading coronavirus. Haven assets from the yen to Treasuries slumped.

The rose more than 2% in early trading, spurred by the American president’s promise for “major” moves later Tuesday. Gains that reached 5% overnight faded, though, on reports the White House might not be as far along as thought. European equities rallied, with Germany considering easing bank capital requirements. futures rallied after Monday’s crash. The slid alongside the . Ten-year Treasury yields retraced about half of yesterday’s drop.

“A strong rebound today, if it in fact holds, does not mean the volatility, or even the worst, is behind us. Rather, investors should expect continued gyrations both up and down until there is greater certainty on coronavirus,” said Greg McBride, chief financial analyst at Bankrate.com.

The rebound in risk assets was sparked by signs governments around the world are awaking to need for stimulus measures to combat the virus that is threatening to plunge the global economy into recession. Donald Trump’s proposal will likely include a payroll tax cut and a short-term expansion of paid sick leave, according to people familiar with the plan.

At the same time, measures to contain the coronavirus continue to undermine prospects for corporate earnings, and raise the danger of a funding crisis, while the oil price crash threatens a swath of defaults among producers. Italy added nationwide travel restrictions to its effective lockdown of the northern region of the country.

“While things feel like the end-of-days I’d stay risk averse in the near-term, but expect bear market rallies,” Chris Weston, head of research at Pepperstone Group, said.

Elsewhere, Japanese government bonds tumbled after an auction of five-year debt flopped.

Here are some key events coming up:

• The European Central Bank’s policy decision comes Thursday amid expectations it may ease policy.
• The U.K. Chancellor of the Exchequer unveils the government’s 2020 budget on Wednesday.
• The U.S. core consumer price index, due Wednesday, is expected to remain subdued in February.

These are the main moves in markets:

Stocks

• The S&P 500 Index advanced 2.5% as of 9:51 a.m. New York time.
• The Index rose 1.9%.
• The MSCI Asia Pacific Index climbed 0.5%.
• The MSCI All-Country World Index advanced 0.5%.

Currencies

• The Bloomberg Dollar Spot Index jumped 0.6%.
• The sank 0.6% to $1.1379.
• The decreased 0.7% to $1.303.
• The Japanese yen weakened 1.9% to 104.34 per dollar.

Bonds

• The yield on Treasuries climbed 11 basis points to 0.65%.
• The yield on Treasuries climbed five basis points to 0.43%.
• Germany’s yield climbed 10 basis points to -0.76%.
• Japan’s yield increased 12 basis points to -0.048%.

Commodities

• surged 8.7% to $37.31 a barrel.
• weakened 0.9% to $1,660.70 an ounce.
• Iron ore climbed 4.3% to $88.66 per metric ton.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.