Global Stocks Rise as Investors Bet on Economic Resilience
February 04 2020 - 6:56AM
Dow Jones News
By Caitlin Ostroff
Stocks rose Tuesday on speculation that global economic growth
will prove to be resilient as fiscal and monetary policies blunt
the impact of the coronavirus outbreak on China's economy.
Futures linked to the S&P 500 index gained 1%. The
pan-continental Stoxx Europe 600 also rose over 1%, with the U.K.'s
FTSE 100 climbing 1.4%. The Shanghai Composite Index ended the day
up 1.3%, following a steep selloff Monday.
Fresh data in recent days showing that global manufacturing
appeared to be steadying, along with the Chinese central bank's
moves to inject liquidity into its banking system this week, have
allayed some of the most pressing concerns about global growth,
investors said. In the U.S., a widely followed gauge Monday showed
that the manufacturing sector had returned to growth in January for
the first time since July.
Meanwhile, the People's Bank of China offered funds in the
overnight market for a second consecutive day as it seeks to
encourage lending to businesses that are struggling. The Chinese
government has barred travel and asked companies to halt operations
as it tries to stop the spread of the deadly virus that has killed
more than 400 people and infected more than 20,000.
"There has been some investor psychology being built up over the
last 10 years that the central banks will do whatever they need
to," said Peter Garnry, head of equity strategy at Saxo Bank. "That
is what the equity market is at least betting on. Whether that
comes through, we'll have to see."
Yields on government bonds rose as investors left haven assets
in search of better returns. The yield on the 10-year U.S. Treasury
climbed to 1.565%, from 1.520% Monday. The yield on similar German
bunds climbed to minus 0.448%, from minus 0.464%.
Among European equities, oil giant BP rose 4.6% in London
trading after a measure of profit for the fourth quarter beat
analysts' expectations.
Crude prices rebounded, with Brent crude, the global benchmark,
rising over 1% just a day after skidding into a bear market as it
fell more than 20% from September levels.
Later in the day, companies including Ford Motor, Chipotle
Mexican Grill and Walt Disney will report earnings. Investors will
also be tuning into Gilead Sciences's briefing to glean the
potential progress on an experimental treatment it has developed to
treat coronavirus.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
February 04, 2020 06:41 ET (11:41 GMT)
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