Stocks erased gains along with U.S. equity futures on Wednesday and Treasuries advanced while investors waited for details on government rescue packages to counter the hit from the coronavirus.
Futures on all three major American indexes turned lower. The White House and Congress agreed on a fiscal package of more than $2 trillion, which still awaits a vote in the Senate, as well as House approval. Equity markets across Europe and the U.K. lost steam from an earlier surge as euro-region leaders inched toward a stimulus accord. Shares in Asia posted their best one-day increase since 2008 earlier.
WTI crude oil turned lower and Treasuries erased a decline. The dollar fell for a second day versus its biggest peers including the euro. The single currency added to Tuesday’s gain as Germany took a step toward declaring a state of emergency to unlock a historic rescue package. A Bloomberg gauge of financial conditions loosened for the first time in six sessions.
Investors were hoping for U.S. and global equity indexes to post their first back-to-back daily gains since the rout began a month ago, even as economies from Delhi to Milan and Seattle reel from the deepening pandemic. But the number of infections globally continues to mount and Spain reported the largest number of deaths yet in a day, reminding traders that the hreat to the global economy hasn’t passed.
On Tuesday, the Dow Jones Industrial Average rose more than 11% to clock its biggest advance since 1933, while the S&P 500 climbed the most in 12 years. Still, key gauges of U.S. manufacturing and services in March fell the most on record, showing the deep toll the outbreak has already taken.
“The actions of monetary and fiscal policymakers should help us prevent a Global Financial Crisis-style credit crunch,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote to investors. “Tuesday’s sharp equity rally shows that the combination of central banks’ entire playbook and substantial, direct fiscal support can be well-received by markets.”
U.S. President Donald Trump’s administration reached a deal with Senate Democrats and Republicans on a package to combat the fallout of the virus that Senate Majority Leader Mitch McConnell said will be passed later Wednesday.
“We still need to see a slowing of the virus cases and a peaking in the U.S.,” Carol Pepper, chief executive officer at Pepper International, told Bloomberg TV. “Because until then we’ll have these huge relief-rally days — then we’ll get a scary day and the market will plunge down again.”
Spot gold drifted lower after a squeeze of historic proportions pushed its prices to the biggest one-day gain since November 2008 on Tuesday. The closure of refineries and demand for physical gold had caused a disconnect between prices in London and New York.
These are the main moves in markets:
- The Stoxx Europe 600 Index climbed 1.8%.
- Futures on the S&P 500 Index fell 0.4% as of 6:52 a.m. New York time.
- The MSCI Asia Pacific Index rose 5.6%.
- The Bloomberg Dollar Spot Index dipped 0.6%.
- The euro climbed 0.2% to $1.0811.
- The British pound gained 1.3% to $1.1914.
- The Japanese yen was unchanged at 111.23 per dollar.
- The yield on 10-year Treasuries dipped three basis points to 0.82%.
- Germany’s 10-year yield decreased one basis point to -0.33%.
- Britain’s 10-year yield was unchanged at 0.461%.
- Gold decreased 0.6% to $1,622.20 an ounce.
- West Texas Intermediate crude decreased 1.7% to $23.60 a barrel.
— With assistance by Gregor Stuart Hunter, Andreea Papuc, Adam Haigh, and Cecile Gutscher