Stocks surge on hopes for easing virus crisis

April 07, 2020

Wall Street powered to a solid rally, with the Dow gaining 1,600 point to close 7.7 percent higher,

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Photo: AFP

Global equity markets rebounded strongly Monday as some of the world's worst-hit countries reported falling coronavirus death rates, while oil prices sank after a meeting of top producers was delayed.

Wall Street powered to a solid rally, with the Dow gaining 1,600 point to close 7.7 percent higher, while key eurozone markets closed five percent higher or more.

"It's going up on hopes that perhaps we're reaching a peak in this coronavirus," said Peter Cardillo of Spartan Capital Securities.

AvaTrade analyst Naeem Aslam said "investors are shrugging off the pessimism" as death rates slowed in a number of European countries like Italy, Spain and France.

Besides news of the slowing deaths, US investor optimism was also fueled by "early signs that the virus' intensity in the epicenter of New York may be hitting an apex," said analysts at Charles Schwab.

London gains were capped by a stronger pound, but some of that value was lost after news broke that British Prime Minister Boris Johnson was admitted to intensive care due to the coronavirus.

'Worst in 100 years '

But even as traders were feeling more optimistic, European governments were reaching for superlatives to describe the economic damage of the pandemic.

The French finance minister said his country was headed for its worst recession since World War II, while German leader Angela Merkel said the virus outbreak was the biggest challenge ever for the European Union.

Analysts at Oxford Economics said the pandemic "may trigger annual GDP declines among the worst seen in the last 100 years."

Meanwhile, the commodities' markets attention was on a planned meeting of OPEC and other key crude producers aimed at easing a supply glut that had sent oil prices crashing.

Both main contracts had soared last week after Trump said Saudi Arabia and Russia would hold talks on ending their price war, and after it emerged that OPEC would be holding a teleconference on Monday.

However, investors were dealt a blow over the weekend when the meeting was delayed until Thursday.

Analysts warned there were doubts that the US would take part in the discussions, which could be a major sticking point for Moscow and Riyadh.

But even if a deal is reached, there is skepticism the talked-about cuts of 10 million barrels a day would be enough to help the oil market, owing to a collapse in demand caused by the pandemic.

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