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GLOBAL MARKETS-Stocks rebound grinds past 10% after $2 trln U.S. stimulus boost

Published 25/03/2020, 14:24
Updated 25/03/2020, 14:30
© Reuters.

* MSCI ACWI builds on biggest gains since 2008 financial
crisis
* Wall Street expect to open lower though after monster
jumps
* Gold retain most of gains after big jump
* Dollar slides as funding squeeze eases a little
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones
LONDON, March 25 (Reuters) - A breakneck rebound in world
stocks made it past the 10% mark on Wednesday before more global
coronavirus warnings and fresh turbulence in commodity markets
saw things grind to a halt.
Hopes that an incoming $2 trillion U.S. fiscal stimulus will
ease the economic devastation caused by virus lockdowns gave
world equity indexes .MIWD00000PUS their first back-to-back
gains in a month, though wasn't plain sailing.
Europe's main markets in London, Frankfurt and Paris were
struggling to stay positive after tearing 4%-5% higher and oil
prices swung from 3% up to 3% down, while Wall Street looked set
to open lower after Tuesday's stellar surge. .EU .T .N
The Dow Jones Industrial Average .DJI had soared over 11%
in its biggest one-day percentage gain since 1933 and the S&P
500 scored a 9.4% jump - its tenth best day on record out of
24,067 trading sessions since daily data started in 1927.
"The right steps have been taken but the main thing that is
driving the market at the moment is sentiment," said Chris Dyer,
Director of Global Equity at fund manager Eaton Vance.
He said it was now vital to see some positive signs on
combatting the epidemic and that health systems were not being
overwhelmed. "Market direction can change very, very quickly
depending on one item of news or one development," he added.
The U.S. stimulus deal is expected to include $500 billion
in direct payments to people and $500 billion in liquidity
assistance. President Donald Trump had also pressed his case for a
re-opening of the U.S. economy by mid-April, though that met
with immediate scepticism given the rise in infections in the
United States is now among the biggest in the world.
In particular, its financial hub of New York City suffered
another big increase, fuelling worries about a shortage of
hospital beds. In Europe too, there were more high-profile cases including
Britain's Prince of Wales, while an internal EU document seen by
Reuters showed the bloc needs 10 times more protective equipment
and devices like ventilators than traditional supply chains can
provide. "Global equities are clearly a better value proposition than
they were a month ago, but we would exercise caution against
value opportunities becoming value traps," said Tim Graf, head
of Macro Strategy EMEA at State Street Global Markets.
"Bull markets do not typically begin with 10 percent rallies
in a single day, even if the policy response to this crisis has
been more expansive and powerful than any previously offered."

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DOLLAR DE-STRESS
In the U.S., the benchmark S&P 500 is still nearly $8
trillion below its mid-February high, and investors expect more
sharp swings. Wall Street's fear gauge .VIX eased overnight
but was on the rise again ahead of Wednesday's open. .N
In the currency markets, the dollar slipped for a third
straight session as the scramble for liquidity was soothed by
the super-sized U.S. stimulus plan, though it was starting to
look a little stronger again. /FRX
The risk-sensitive Australian dollar AUD=D3 jumped over
the 60-U.S. cent mark for the first time in a week and the euro
traded up 0.3% past $1.0835 EUR= and, with traders moving
gradually away from safety boltholes, the Japanese yen eased to
111.34 yen per dollar JPY= to leave it just off a one-month
low.
Bond markets were also calmer. Benchmark U.S. Treasuries
were yielding 0.86% while in Europe Germany's 10-year yield
DE10YT=RR edged a basis point higher to -0.31%, tailed by
other higher-rated government debt. NL10YT=RR , AT10YT=RR
In Italy, the epicentre of the virus in Europe, 10-year
borrowing costs were unchanged at 1.59%; nearly half last week's
high of 3.01% IT10YT=RR .
European Central Bank chief Christine Lagarde asked euro
zone finance ministers during a videoconference on Tuesday
evening to seriously consider a one-off joint debt issue of
"coronabonds", officials also told Reuters. In metals markets, gold changed hands at $1,610.0 per ounce
XAU= , retaining most of Tuesday's gains of almost 5%, its
biggest jump since 2008.
Oil prices buckled though another 3% as concerns about
demand took over again. O/R
Brent crude futures LCOc1 pinballed from $27.51 per barrel
to $26.22. That is up about $4, or 12%, from their 18-year
intraday low on Friday, though on the month the market is down
over 45%.

(editing by John Stonestreet)

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