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Global Stocks Gain On News of Oil Cuts and European Stimulus Packages

The global equity benchmarks improved a little bit on the news of government stimulus packages and central banks’ trying to infuse some stability in the economy.
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Global stock markets are witnessing some wild swings with the stocks moving up and down based on any news of the pandemic curve flattening in the worst affected areas such as Europe and the US.

The global equity benchmarks improved a little bit on the news of government stimulus packages and central banks’ trying to infuse some stability in the economy. Even oil prices showed an improvement over news of the Organization of the Petroleum Exporting Countries (OPEC) body agreeing on a cut on output. But the surge was short-lived as the decrease in output did not match the expected cutback by the market.

OPEC+ countries, which include Russia, agreed to cut oil output of about 15 million barrels per day (bpd), roughly 15% of global supplies. The plan includes gradual cuts of about 5 million bpd from producers outside the OPEC+ group. US crude dropped 7.4% to $23.22 a barrel. Brent crude fell 3% to $31.85 per barrel on the news.

MSCI’s gauge of stocks across the globe gained 1.58%, reports Reuters. The benchmark index earned back about $1.7 trillion in market value since it hit an eight-year low in March. The S&P 500 gained more than 10% this week. β€œSentiment remains volatile, but investors appear to be looking through the growing headline numbers of COVID-19 cases and focusing on signs that the spread of the pandemic is being brought under control, which in turn is underpinning hopes for a relatively swift relaxation of containment measures,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

The Dow Jones Industrial Average rose 285.8 points, or 1.22%, to 23,719.37; the S&P 500 gained 39.84 points, or 1.45%, to 2,789.82 and the Nasdaq Composite added 62.67 points, or 0.77%, to 8,153.58, according to the news agency.

Stocks in the United States showed an upswing over the $2.3 trillion stimulus package and the assurance by the Federal Reserve Bank that they would be investing in municipal bonds of the state and local government to help them respond to the health crisis.

New York, the epicentre of the coronavirus crisis, saw new cases lessening to about 200 a day, reported New York Governor Andrew. Although the death toll was still high. According to him, the stay at home measures and social distancing was working. Cuomo said, β€œYou can’t relax. The flattening of the curve last night happened because of what we did yesterday.”

Treasury Secretary Steven Mnuchin in an interview to a news channel said that he was hopeful of reopening the US economy by next moth earliest, but it still depended on how the health scare panned out and how confident was the President about the situation.

In the European region, the Euro gained on hopes of a coming stimulus package from the finance ministries and lessening of reported deaths due to the coronavirus. EU finance ministers are discussing a half-a-trillion economic support package. The pan-European STOXX 600 index rose 1.5%. Β 
Jobless claims in the US are burgeoning every week. Data shows that they exceeded 6 million for the second week straight. 16.8 million people have sought aid since the outbreak.

The unemployment rates have reached 10 percent and may soon touch the 25 percent figure of the Depression-era. β€œWe’re probably on pace to lose more jobs in April alone than we lost during the entire Great Recession,” said Dante DeAntonio, senior economist at Moody’s Analytics in New York to Reuters.

Most major corporations have done away with any financial forecasts for the coming two quarters. Stringent cash flow cut measures have been put in place. Recession that has set in, will see an earnings dip of 15.7% in the first quarter and around 30 % in the second quarter, according to financial analysts.

 

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