Coronavirus hopes propel stocks, euro higher
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[April 07, 2020]
By Marc Jones
LONDON (Reuters) - World stock markets
enjoyed a second day of sharp gains on Tuesday as signs of progress
against the coronavirus in both Europe and the United States and more
liberal helpings of stimulus kept investors charging back in.
There was an added boost from commodity markets as oil climbed nearly 3%
on supply cut hopes, while currency markets also came alive as a
tumbling dollar saw the euro race out of a six-session rut of falls.
Equities was were the main action was however. Japan's Nikkei followed
up Wall Street's 7% surge on Monday [.N] with a 2% jump as its
government promised a near $1 trillion stimulus package - equal to a
fifth of its GDP.
Europe quickly got in the swing of things too. The pan-European STOXX
600 index climbed over 3% as the respective markets in London,
Frankfurt, Paris and Milan all bounded higher.
"A day does not a trend make, a week does not a trend make... but we
think the market is bottoming out," said Jeff Mortimer, Director of
Investment Strategy at BNY Mellon Wealth Management.
"We are trying to get clients to understand that (in market performance
terms) better times ahead can come more quickly then you expected."
Worldwide, the virus has infected more than 1.3 million people and
killed over 74,000, and though the numbers are still rising in many
highly-populated countries, some tentative improvements have given hope.
In hardest-hit Italy and Spain, authorities have started looking ahead
to easing lockdowns after steady falls in fatality rates. In the United
States too, the daily number of deaths in the country's worst-affected
area, New York, has also shown signs of steadying.
The U.S. dollar, which has been soaking up safe-haven flows for weeks,
slipped against most major currencies.
The euro shot up 0.7% to $1.0865 to snap a six-day run of falls, the
pound climbed despite Britain's Prime Minister remaining in intensive
care, and the Australian dollar jumped over 1.5% to its highest in a
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The German share price index DAX graph is pictured at the stock
exchange in Frankfurt, Germany, April 6, 2020. REUTERS/Staff/File
New Zealand's dollar rose 1.3% too, while the Japanese yen shook off
an early dip to clamber up to 108.92 per U.S. dollar. [/FRX]
It wasn't only oil driving commodities markets higher either, copper
punched up to a 3-week high with a 3% gain for industrial metals,
while safe-haven gold wilted.
Benchmark 10-year U.S. Treasuries and German Bund continued to lose
out too. U.S. yields - which move inverse to price - rose to 0.73%
having fallen almost 9 basis points on Monday, and Bund yields were
up 6-9 basis points across the curve.
The Eurogroup of finance ministers within the single euro zone
currency bloc are scheduled to meet later on Tuesday, and analysts
expect more joint action to help prop up the economies of member
Cyprus, one of the lower-rated countries in the bloc, is marketing a
seven-year and 30-year bond issuance. In Asia Indonesia issued a
"Investors have recently been detecting growing public support for
the concept of coronabonds in European Commission and ECB circles,"
said DZ Bank analyst Daniel Lenz, adding that German ECB Executive
Board member Isabel Schnabel was among those who appeared to voice
(Additional reporting by Abhinav Ramnarayan in London; Editing by
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