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April 6, 2020

Stock markets rebound on easing virus crisis but oil dips


Mon, Apr 06, 2020

LONDON: Asian and European equity markets rebounded Monday as some of the world's worst-hit countries reported falling death rates, providing much-needed hope in the battle against coronavirus, but oil prices sank after a meeting of top producers was delayed.

While deadly COVID-19 continues its deadly sweep across the planet, with more than 1.25 million now declared infected and nearly 70,000 dead, news out of Europe that the rise of fatalities was easing has lifted spirits on trading floors.

Italy reported its lowest daily death toll in two weeks, while Spanish officials said deaths fell for the third straight day and France reported its lowest daily toll in a week.

In early afternoon eurozone deals, Frankfurt stocks rallied 4.5 %, Paris won 3.7 %, Madrid gained 3.0% and Milan added 3.2%.

'Shrugging off pessimism'

"European markets are trading higher because investors are shrugging off the pessimism," said AvaTrade analyst Naeem Aslam.

"They are focused on more optimistic things: the slowing death rate caused by coronavirus.

Italy, Spain, France, and Germany have all seen declining numbers.

"London jumped 2.1% nearing midday, with gains capped by news that British Prime Minister Boris Johnson  was hospitalised for precautionary tests after suffering "persistent" coronavirus symptoms for ten days.

The pound however rose as officials insisted that Johnson was "still very much in charge of the government".

Elsewhere, South Korea saw the fewest new cases in six weeks, Australian new infections were also dropping and Donald Trump said the US was showing signs of stabilising, despite the number of cases there passing 335,000 — the highest in the world.

Markets also shrugged off data Friday showing a massive drop in US jobs in March that added to news that millions of people had applied for unemployment benefits.

Tokyo, Sydney and Manila all rose more than four %, while Seoul, Singapore and Jakarta gained almost four %.

Hong Kong jumped 2.2 %, while Shanghai was closed for a holiday.

OPEC delayed

Attention this week will be 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 as Trump said Saudi Arabia and Russia would hold talks on ending their price war, while it also emerged OPEC would be holding a teleconference on Monday.

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

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

But even if a deal is reached, there is scepticism that suggested cuts of 10 million barrels a day will be enough to help the oil market, owing to a collapse in demand caused by the pandemic.