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Stocks head for higher ground, oil stuck in a rut

Stock MarketsApr 16, 2020 06:40AM ET
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2/2 © Reuters. Pedestrians wearing face masks walk near an overpass with an electronic board showing stock information in Shanghai 2/2

By Marc Jones

LONDON (Reuters) - Europe led world stock markets back to higher ground on Thursday as tentative moves to reopen parts of the some of its larger coronavirus-hit economies offset some truly stinking global economic numbers.

Asian equities and U.S. futures had wilted earlier in the day after warnings of a Great Depression-style slump in the world economy, a record plunge in U.S. retail sales, oil near an 18-year low [O/R] and the prospect of a sky high jump in U.S. jobless claims later in the session.

But the pan-European STOXX 600 index (STOXX) rose over 1% in early trade, spurred by a drop in the virus death tolls in both Spain and Italy and reassuring statements from two of the continent's big budget airlines about their survival prospects. (EU)

Wall Street futures (ESc1) recovered, too, and in the currency and bond markets both the dollar and benchmark German Bund and U.S. Treasury yields shifted higher in the more 'risk-on' mood. [/FRX] [GVD/EUR]

"We have had this big wave of big announcements by governments and central banks and now we need to get into the nitty gritty of how it all works," said AXA Investment Managers chief economist Gilles Moec.

"We need to see if it is working, how it is working and if we need to do more."

Markets may be seizing on the fact that policymakers, however reluctantly, are starting to allow stringent lockdowns to ease.

Germany is proposing to reopen schools and some retailers starting May 4, while around 20 U.S. states spared the worst of the coronavirus pandemic may start reopening their economies by President Donald Trump's May 1 target date.

Firms are looking to restart as well. Volkswagen (DE:VOWG_p) has said its factories in Germany and Slovakia will resume some production from April 20 with others following a week later.

But the economic figures are dire. After the IMF’s forecasts for this year, markets are expecting China to report on Friday that Q1 GDP contracted for the first time on record, and hopes for a quick rebound are fading fast.

A Reuters survey showed that most Japanese firms feel stimulus announced so far are insufficient and Wednesday's U.S. data also showed manufacturing output there dropping the most in over 74 years.

OIL IN A RUT

Asia had had a difficult day as a result. Tokyo's Nikkei dropped 1.3% and MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) lost almost 1%, wiping out early week gains that had taken it to a one-month high.

The risk-sensitive Australian dollar fell to a one-week low and oil prices struggled to rise against the expectation of cratering demand.

U.S. crude (CLc1) sat at $20.22 per barrel, just over $1 above an 18-year low hit on Wednesday, and Brent crude (LCOc1) rose 37 cents or 1.3% in European trade to $28.02 per barrel.

The International Monetary Fund is predicting zero growth in Asia this year for the first time in 60 years, as exporters are pounded by slumping demand and anti-virus measures force consumers to stay home and shops to shut down.

Benchmark indexes in Australia (AXJO), Hong Kong (HSI) and Shanghai (SSEC) also posted falls between 0.4% and 1.3% and some emerging markets fell harder.

"A recovery timeline...remains impossible to predict," said Ronald Lam, chief customer officer at airline Cathay Pacific (HK:0293), which has slashed nearly all its passenger capacity and lost a fifth of its value this year.

Stocks head for higher ground, oil stuck in a rut
 

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Comments (9)
Connery Wiltshire
Connery Wiltshire Apr 16, 2020 6:59AM ET
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Stock market will still move higher of the bsd news
weng yew Lee
weng yew Lee Apr 16, 2020 5:58AM ET
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Nope, stock market is just like online license casino lolz, tonight will b bad data on job unemployment. So many will bet on downaide, instead u shld b on upside. XD. Good luck all. lolz
Brad Dover
Brad Dover Apr 16, 2020 3:38AM ET
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this is even much worse than the last republican disaster under GWB Data showed U.S. retail sales fell the most on record last month and manufacturing output fell by the most in 74 years, raising fears of a deep recession. Another sky high figure is expected when U.S. weekly jobless claims land later in the day.
Get Sirius
Get Sirius Apr 16, 2020 3:17AM ET
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Stock rose up again few hundred points (dow), so I guess it must be some bed news pop up. And yes I found it ‘Treasury yields slightly lower’ great. Today after today results of job claims stock can skyrocket
Brad Dover
Brad Dover Apr 16, 2020 2:53AM ET
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so much winning all trump has done has been SEVERE damage to our country and budget now he will cut your SS and Medicare to pay for his disasters
Nick Burns
Nick Burns Apr 15, 2020 8:47PM ET
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how bad are things going to get? is bread going to 15 dollars a loaf is gas going to be 20 dollars s gallon I mean for people with jobs left you know the other 140 mil still employed .. whats going to be the biggest problem?
Brad Singer
Brad Singer Apr 15, 2020 8:47PM ET
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No money
Nick Burns
Nick Burns Apr 15, 2020 8:47PM ET
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Brad Singer  of course there will be money. I've lived through i don't know how many so called "recessions" there was always money and places selling stuff. What will be so bad this time vs any other?
Randall Wagner
Randall Wagner Apr 15, 2020 8:38PM ET
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Even before the virus existed this sounds like same description I was reading back then. mmmmm
Shane Thomas
Shane Thomas Apr 15, 2020 8:20PM ET
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Maybe in China....not in US
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Binko Binev
Binko Binev Apr 15, 2020 8:20PM ET
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Nick Burns   read a textbook
Maff Uw
Maff Uw Apr 15, 2020 8:20PM ET
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https://www.thestreet.com/investing/impact-of-negative-us-interest-ratesbasically a sugar high chasing higher risk yield, bubbles and then an investor reversion to solid cash generation of solid companies.
Maff Uw
Maff Uw Apr 15, 2020 8:20PM ET
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Nick Burns https://www.thestreet.com/investing/impact-of-negative-us-interest-rates
Nick Burns
Nick Burns Apr 15, 2020 8:20PM ET
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Binko Binev  so you don't know got it lol
Nick Burns
Nick Burns Apr 15, 2020 8:20PM ET
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Maff Uw  thanks looks like not much will change or happen lol
Kilo Byte
Kilo Byte Apr 15, 2020 8:07PM ET
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Look out below!
 
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