U.S. Futures Gain After Primaries; Treasuries Flat: Markets Wrap
These are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index surged 1.8% as of 7:20 a.m. New York time.
- Futures on the S&P 500 Index climbed 2.4%.
- The MSCI All-Country World Index increased 0.3%.
- The U.K.‘s FTSE 100 Index surged 1.9%.
Currencies
- The Bloomberg Dollar Spot Index was little changed.
- The euro sank 0.3% to $1.114.
- The British pound was little changed at $1.2815.
- The Japanese yen weakened 0.4% to 107.54 per dollar.
Bonds
- The yield on 10-year Treasuries dipped less than one basis point to 1%.
- The yield on two-year Treasuries decreased one basis point to 0.69%.
- Germany’s 10-year yield gained one basis point to -0.62%.
- Britain’s 10-year yield declined one basis point to 0.383%.
Commodities
- West Texas Intermediate crude advanced 1.7% to $48 a barrel.
- Gold strengthened 0.3% to $1,646.60 an ounce.
American stock-index futures jumped with European equities on Wednesday as investors took in surprises from the U.S. Presidential primary and expectations of global policy responses to the coronavirus after the Federal Reserve’s emergency rate cut. Treasury 10-year yields hovered around 1% after breaching that level on Tuesday for the first time in 150 years.
Contracts on the S&P 500, Dow Jones Industrial Average and Nasdaq Composite rebounded from tumbles on Tuesday, when the 50 basis-point Fed move failed to ease concerns about an economic downturn. Moderate Joe Biden’s surprise comeback hours later in the Super Tuesday race for the Democratic Party nominee took the lead from Bernie Sanders that had unsettled some investors. The Stoxx Europe 600 erased early declines, with utilities and miners leading the advance and all 19 industry sectors in the green.
A volatile session in Asia left stock markets mixed. Hong Kong and China PMI data fell to record lows, underlining impacts of the virus on the region’s commerce. The euro dipped after posting its best four-day rally since January 2018. Crude oil gained for a third day.
Investors are anxious for promised policy moves by the Group of Seven to confront the virus while they’re tempted to buy on dips in risk assets, all while the world’s biggest bond market gradually moves closer to negative yields. The Democratic leadership contest threw up a fresh challenge to President Donald Trump as Biden, positioned as a moderate against a more progressive Sanders in the race for the Democratic nomination to take on Trump in November, won nine of 14 states as results rolled in.
“The magnitude of the market sell-off and the rapid policy reaction encouraged us to recently add to our risk positions” through additional exposure to U.S. high-yield credit versus high-quality bonds, Mark Haefele, UBS Wealth Management’s global chief investment officer, wrote in a note. “Where appropriate, we also advocate options strategies to increase exposure to U.S. equities.”
Equities earlier had tumbled after Fed Chairman Jerome Powell warned that the virus outbreak will weigh on activity “for some time.” Expectations the Fed may act again as soon as this month show markets remain extremely cautious about the economy’s prospects to weather the hit. Meanwhile, virus infections and deaths continued to rise in China and the U.S.
“They’re pushing on a string,” said veteran emerging-markets investor Mark Mobius in a Bloomberg TV interview. “The problem is not so much interest rates, which are already very low globally. The problem is the supply chain coming out of China.” Markets will worsen “unless China can ramp up production,” he said.