US stocks opened higher on Tuesday, following broad gains across Europe and Asia, as investors looked past the start of a potentially bleak earnings season and instead focused their attention on a modest rebound in Chinese exports.
The S&P 500 rose over 2 per cent in early New York trading, regaining momentum after the previous day’s declines.
The move higher came despite earnings releases from big US banks that showed the initial extent of the damage from the coronavirus outbreak. JPMorgan Chase, America’s largest bank, said profits fell 69 per cent in the first quarter as it increased provisions for potential losses on loans to customers hit by the crisis. Wells Fargo said net income fell almost 90 per cent.
The Stoxx Europe 600 was up 0.8 per cent in early afternoon trade, having risen as much as 1.3 per cent at the open. Frankfurt’s Dax 30 rose 1.5 per cent while London’s FTSE 100 was the only major index down, 0.6 per cent lower. The UK government indicated there were no immediate plans to ease lockdown measures.
Chinese exports fell in March by much less than analysts had anticipated as the country ended lockdowns aimed at combating the spread of coronavirus. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks closed up 1.9 per cent.
“While the data has not always proven reliable, it suggests that the Chinese economy is starting to stabilise faster than expected,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Various analysts warned the economic respite may be shortlived, with a collapse in demand from abroad offsetting the easing of supply-side constraints. Analysts at Barclays predicted a 20-30 per cent contraction in Chinese exports in the second quarter — compared with 13 per cent in the first — driven by “an expected growth slump in the country’s major trading partners”.
Oil prices gave up earlier gains as concerns lingered over whether a US-backed Opec deal to cut supply would be enough to offset the global crude glut. Brent crude, the international benchmark, fell over 2 per cent to $31.01 a barrel while West Texas Intermediate was down 4.1 per cent at $21.50.
The S&P 500 has recovered a good part of its losses since plunging in late February and early March, on optimism the virus was nearing its peak. It is still 18 per cent off its all-time high, however.
“It is remarkable that the US is in the midst of its greatest economic crisis in nearly a century and unprecedented societal disruption while the stock market trades at the same level as it did in June 2019, just 10 months ago,” analysts at Goldman Sachs said.
Markets are pricing in a sharp economic recovery, in part thanks to sweeping intervention by the Federal Reserve, including new liquidity injections of up to $2.3tn announced last week.
“Staggering as this all is, it arguably isn’t enough,” said Rabobank. “If we were to see a second virus wave later in the year then $2.3tn is far too small a sum to save everyone.”
The yield on 10-year US Treasuries fell 0.03 percentage points to 0.74 per cent, indicating a rise in price.
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April 14, 2020 at 07:31PM
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European and Asian stocks rise as Chinese data boost sentiment - Financial Times
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