(Updates with early European markets)
* European shares rally 2% on global rate cut hopes
* U.S. stock futures up 1.5%
* U.S. Treasury yields slide towards 1% for first time
* BOJ and BoE make soothing noises
* Oil jumps 3.5% on signals of supply cuts from OPEC
By Marc Jones
LONDON, March 2 (Reuters) - World stocks markets regained a
measure of calm on Monday as hopes for a raft of global interest
rate cuts to soften the economic blow of the coronavirus
steadied nerves and drove U.S. Treasury yields close to 1%.
After last week's worst plunge for equities markets since
the depths of the 2008 financial crisis, it was always going to
be a wild ride.
Asia had initially dived again after China reported a record
slump in factory activity but the
region rallied to finish higher as bond yields sunk and talk of
OPEC supply cuts sent oil prices roaring up 3.5%. O/R
Europe then made a blistering start. The FTSEurofirst 300
.FTEU3 jumped over 2%, putting it on course for its best day
in well over a year .EU and Wall Street S&P 500 and Dow
futures ESc1 1YMc1 were pointing to similar gains too. .N
"The market is coming back because there is perception that
there will be a coordinated G7 policy response," said BlueBay
Asset Management's head of credit strategy David Riley.
"We have Fed and ECB meetings coming up in the next couple
of weeks. The Fed is the key one and it will be very hard for
them to hold off (from rate cuts) if we are in a situation where
the economic downsides are becoming more prevalent."
The sheer scale of losses led financial markets to price in
policy responses from the U.S. Federal Reserve and European
Central Bank to the Bank of Japan and the Reserve Bank of
Australia. L4N2AU0ZB]
Futures now imply a full 50 basis point cut by the Fed at
its March 17-18 meeting 0#FF: while Australian markets
0#YIB: are pricing in a quarter-point cut at the RBA's Tuesday
meeting.
On Monday, investors were encouraged by comments from Bank
of Japan Governor Haruhiko Kuroda who said the central bank
would take necessary steps to stabilise markets. A spokesman for the Bank of England said it too was
monitoring developments and assessing "potential impacts on the
global and UK economies and financial systems". Bets that the Fed will be first to cut pushed the dollar to
a one-month low against the world's major currencies. /FRX
Individually, it was down at $1.1070 to the euro EUR= ,
flat on the yen at 108.08 yen JPY= and only made gains on the
pound which wilted as what are likely to be fraught post-Brexit
trade talks with the EU began in Brussels.
JUST ANOTHER MANIC MONDAY
MSCI's broadest index of world shares .MIWD00000PUS rose
0.7%, up for the first time in eight sessions and recovering
from Asia's early dip, though the uptick barely offset its 10.4%
tumble last week. Shanghai had added 3.3%. .SS
The rapid spread of the coronavirus has led businesses
globally to curb travel, send workers home and cancel events,
hitting stocks in the aviation, gambling and tourism sectors.
The disruption to global supply chains and productivity has
darkened the outlook for a world economy already struggling with
the fallout of the U.S.-China trade war.
"There's no policy out there, frankly, that is going to be
sufficiently large to offset the nature of what's coming in
terms of the virus. So we have to keep watching these new case
numbers until these show signs of levelling off," said ING's
Carnell.
Nevertheless the bond markets were giving their view loud
and clear.
Benchmark U.S. 10-Year Treasuries hit a fresh record low of
1.0300% US10YT=RR before shuffling back up to 1.1028% in
European trading where German Bunds were still -0.62%. GVD/EUR
Analysts said a sustained market recovery depended on the
rate of new coronavirus infections slowing outside China.
The epidemic, which began in China, has killed roughly 3,000
people worldwide as authorities race to contain infections in
Iran, Italy, South Korea and the United States.
Commodity markets were part of Monday's global rebound. Oil
prices bounced $1.5 a barrel on hopes of a deeper cut in output
by OPEC after earlier hitting multi-year lows. O/R
Brent crude last traded at $51.3 per barrel LCOc1 and U.S.
crude CLc1 at $46.2 per barrel, while industrial metals copper
and nickel were 2% and 3% higher respectively and gold jumped
1.4% too after a mild drop last week. MET/L GOL/
World markets performance https://tmsnrt.rs/37RShMa
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