Stocks gain with U.S. futures; oil pares drop
New York (Apr 22) U.S. equity futures advanced with European stocks on Wednesday as investors weathered continued volatility in energy markets and perused the latest earnings reports. Oil pared a decline, while gold gained.
S&P 500 Index contracts climbed after the gauge slumped more than 3 per cent a day earlier, when investors shrugged off the progress of a fresh relief package to counter the economic hit from the coronavirus. The Stoxx Europe 600 Index rose broadly in the wake of Tuesday’s slump.
Brent crude erased a tumble that reached 17 per cent earlier, while West Texas oil also pared most of its slide. Treasuries edged lower along with the dollar and European bonds fell. That region’s policy makers plan to hold a call on Wednesday evening where they may discuss whether to accept junk-rated debt as collateral from lenders, officials familiar with the matter said.
Investors are continuing efforts to assess the pandemic’s hit to the global economy, with the oil market chaos suggesting it will be deeper or longer than anticipated by those who drove the S&P 500 up 28 per cent from its March lows. Governments are devising ways to return people to work even as they discover infections are more extensive than they insisted only weeks ago.
The coronavirus killed two people in California in early and mid-February, suggesting the pathogen was circulating in the U.S. weeks earlier than health officials thought. While Germany and a few other countries are moving to relax lockdown measures to contain outbreaks, Singapore -- a global standard bearer for taming the deadly illness early on -- has now become home to Southeast Asia’s largest recorded outbreak and is racing to regain control.
Meanwhile, corporate earnings have been mixed. Consumer-goods companies from brewers to paint-makers sounded notes of caution on spending. Heineken NV canceled its interim dividend, while Kering said it doesn’t see a recovery in the U.S. or Europe before at least June or July after sales at its flagship brand Gucci tumbled.
“There’s no way you can predict earnings right now,” Michael Cuggino, portfolio manager at Pacific Heights Asset Management LLC, said on Bloomberg TV. “It’s virtually impossible until we have more visibility with respect to how to world comes out of the coronavirus on the other side.”
AT&T on Wednesday joined the list of companies withdrawing their forecasts. Roche Holding AG increased for a fifth day, after the drugmaker said it still sees a small profit gain this year as demand for its medicines holds up while it works on developing Covid-19 tests.
Elsewhere, the Australian dollar rose as better-than-expected retail sales data triggered the unwinding of some short positions. Stocks slipped in Japan but climbed in other major Asian markets. Gold rebounded to US$1,700 an ounce.
These are the main moves in markets:
Stocks
•Futures on the S&P 500 Index increased 1.3 per cent as of 7:22 a.m. New York time.
•Nasdaq 100 Index futures rose 1.1 per cent.
•The Stoxx Europe 600 Index climbed 1.1 per cent.
•The MSCI Asia Pacific Index gained 0.3 per cent.
Bloomberg
