Global stocks seesaw, yields fall on dire economic outlook

April 16, 2020

NEW YORK/LONDON (Apr 16) - World stock markets seesawed while bond yields retreated on Thursday as dire U.S. jobless data underscored a deepening downturn amid the coronavirus pandemic and tamped down investor hopes a listless economy would soon be back on its feet.

A record 22 million Americans sought unemployment benefits over the past month, with millions more filing claims last week in an early sign of how deep the economic slump caused by the pandemic will be.

President Donald Trump plans to announce new guidelines to reopen the U.S. economy after a monthlong shutdown, joining a growing chorus of leaders around the world clamoring to reignite their economies.

The dollar hit a one-week high, gold rose slightly and U.S. Treasury yields fell for a third session as investors fled to safe-haven assets.

Investors are grappling with whether to be optimistic for when economies pull out of recession or to wait for a vaccine for the novel coronavirus and clear signs growth has fully recovered, said Anthony Saglimbene, global market strategist at Ameriprise.

“The stock market is forward looking and has discounted a lot of some of the really bad economic and earnings numbers that we’re going to get for Q1 and Q2,” Saglimbene said.

“It’s really about when we do reopen, what’s that curve look like? Is it a ‘V,’ is it a ‘U’ or is it a ‘W’? Our view is that it’s going to be slow recovery,” he said.

MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.49% and its emerging market stock index lost 0.52%.

On Wall Street, stocks were mixed. The Dow Jones Industrial Average .DJI fell 237.1 points, or 1.01%, to 23,267.25. The S&P 500 .SPX lost 11.93 points, or 0.43%, to 2,771.43 and the Nasdaq Composite .IXIC added 28.52 points, or 0.34%, to 8,421.69.

European shares rebounded, with the pan-European STOXX 600 index up 0.58%.

Oil prices slid, with official data showing U.S. inventories surging to the most on record. Investors had hoped that a build-up in U.S. inventories may mean producers have little option but to cut output as the coronavirus pandemic ravages demand.

U.S. crude CLc1 was up 0.1% to $19.89 per barrel and Brent LCOc1 was at $27.31, down 1.37% on the day.

Speculation mounted that the European Central Bank was looking to prevent further stress in the region’s debt markets where debt-to-GDP now looks set to top 150% this year.

“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.

The dollar index =USD rose 0.578%, with the euro EUR= down 0.75% to $1.0825. The Japanese yen JPY= weakened 0.22% versus the greenback at 107.74 per dollar,

Policymakers are starting to allow stringent lockdowns to ease, and firms are looking to restart as well. Germany is proposing reopening schools and some retailers starting May 4.

German carmakers Volkswagen (VOWG_p.DE) and Mercedes-Benz (DAIGn.DE) will restart production at some German factories next week and in other countries a week later.

Investment bank Morgan Stanley (MS.N) underscored the damage too as it posted a 32% fall in its quarterly profit on Thursday.

Asia had a more difficult session overnight. 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 AUD=D3 fell to a one-week low and commodity prices had struggled to rise against the expectation of cratering demand.


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