European stocks rise on signs virus spread is slowing
Global stock markets edged higher on Thursday, buoyed by hopes the coronavirus outbreak could be nearing its peak in some of the worst-hit countries, including the US.
European stocks rose in late-morning trading but were well off the best levels of the session.
London’s FTSE 100 was 0.6 per cent higher, having opened up more than 2 per cent. The pan-European Stoxx 600 index advanced 0.3 per cent, to trade around 20 per cent above its mid-March lows.
The sharp shift in market sentiment has come as investors embrace signs that infection numbers are flattening in some of the first European countries to see major outbreaks, such as Spain and Italy.
In the US, there are hopes that this week’s death tally could be the high watermark, while President Trump continues to be vocal about his desire to open up the economy as soon as possible.
US stock futures, which had been up as much as 1 per cent, were flat.
The global number of new daily cases of Covid-19 held steady on Wednesday as 84,835 people were confirmed to have the virus. New daily cases in the US have remained around 30,000 for the past seven days, fuelling hopes that the spread of the virus is starting to plateau.
But Richard McGuire, a rates strategist at Rabobank, urged caution.
“Though the market is desperately trying to embrace the positive sentiment associated with a flattening Covid-curve, the reality is that the numbers are incredibly mixed and difficult to gauge as regards any firm and lasting improvement,” he said.
On Wall Street, stocks closed higher on Wednesday after the rate of increase of new US cases slowed for a fifth consecutive day. The benchmark S&P 500 index rose 3.4 per cent during the session, placing it 22.9 per cent above the nadir of March 23 — a recovery that has been almost as intense as the preceding sell-off.
Still, some of Wall Street’s biggest banks have warned that while the interventions of central banks and governments have seen off the worst of the volatility, more problems may lie ahead.
“My concern is this relief rally might not be sustainable,” said Mislav Matejka, global equity strategist at JPMorgan.
Markets were largely positive during the Asia-Pacific session.
In Hong Kong the Hang Seng rose 1.4 per cent, while Sydney’s S&P/ASX 200 index added 3.5 per cent and South Korea’s Kospi was up 1.6 per cent. Japan’s Topix dropped 0.6 per cent, ending a three-day run of gains.
Support for equity prices fed through into credit markets. The largest high-yield bond exchange traded fund — known by its ticker HYG — rose 2.6 per cent overnight, climbing for a third straight day. The yield on the US 10-year Treasury was flat at 0.74 per cent.
Elsewhere, oil prices rose ahead of a meeting between Saudi Arabia and Russia on Thursday, which has raised hopes of a deal to curb production and underpin sliding prices.
G20 oil ministers are set to meet on Friday to discuss measures to support an industry grappling with a sharp fall off in demand since the coronavirus outbreak began.
Brent crude, the international benchmark, is up almost 4 per cent at $34.14 a barrel.