(Bloomberg) -- European stocks rose after Chinese shares advanced with the yuan as investors took encouragement from the Asian country’s pledges to support the world’s second-biggest economy in the face of the coronavirus outbreak. The yen and gold both dipped.
Gains in the Stoxx Europe 600 Index were led by automakers and miners. U.S. futures climbed, though Wall Street is shut for a holiday, and Treasuries weren’t trading. European bonds were steady, while the euro ticked higher, after closing on Friday at its lowest since early 2017. The dollar was flat.
China’s CSI 300 Index has recouped its losses since trading resumed after the Lunar New Year break, as the central bank lowered one of its interest rates and said it would support firms that can reopen as soon as possible. The momentum failed to buoy most Asian markets, however. Stocks dipped Seoul and Sydney, while Japan’s Topix Index dropped after data showed the country’s economy shrank the most in five years in the last quarter. Cathay Pacific Airways Ltd., which counts on China and Hong Kong for about half its revenue, gave a profit warning and blamed the virus.
Investors in risk assets began the week on the front foot after China over the weekend unveiled plans to reduce corporate taxes and fees, while letting banks run up more non-performing loans. Bloomberg Economics estimated the country’s economy has been running at just 40% to 50% capacity in the last week, underscoring the short-term damage done by the coronavirus-linked shutdowns of large swathes of the country.
“If the Chinese economy does recover and you’ve added all this fiscal and monetary stimulus into it as well, the situation could be that you have much stronger emerging markets into the second half,” Sunny Bangia, a fund manager at Antipodes Partners Ltd., said on Bloomberg TV. “A lot depends on how this virus gets contained and if it can morph into something more minor.”
Hubei, the province at the epicenter of the outbreak, Monday reported 1,933 new cases, slightly higher than a day earlier. Deaths were reported in France and Taiwan over the weekend, bringing to five the number of fatalities outside mainland China.
In Singapore, the government Monday cut its growth forecasts, citing uncertainty over the length and severity of the virus outbreak. The country is expected to unveil a large stimulus package to mitigate the hit from the epidemic.
Elsewhere, Bitcoin fell more than 5% from Friday, slipping back below $10,000. WTI crude oil held above $52.
Here are some key events coming up:
Earnings season rolls on with results from companies including: BHP Group Ltd. on Monday; Tuesday brings Glencore Plc, HSBC Holdings Plc and Walmart Inc.; Deere & Co. results are set for Friday.U.S. celebrates Presidents’ Day on Monday, with financial markets shut.Minutes of the most recent Federal Reserve meeting are published on Wednesday.Indonesia is expected to cut interest rates on Thursday, following emerging-market peers from Brazil to South Africa which have lowered borrowing costs already this year.Group of 20 finance ministers and central bank chiefs are scheduled to meet Feb. 22-23 in Riyadh, Saudi Arabia, and are expected to discuss efforts to support growth amid the coronavirus threat.
These are the main moves in markets:
Stocks
Futures on the S&P 500 Index gained 0.2% as of 9:29 a.m. London time.Nasdaq 100 Index futures increased 0.4%.The Stoxx Europe 600 Index climbed 0.2%.The MSCI Asia Pacific Index fell 0.2%.The MSCI World Index was little changed.
Currencies
The Bloomberg Dollar Spot Index was little changed.The euro climbed 0.1% to $1.0844.The Japanese yen weakened 0.1% to 109.85 per dollar.South Africa’s rand weakened 0.1% to 14.9214 per dollar.
Bonds
Germany’s 10-year yield decreased less than one basis point to -0.41%.Britain’s 10-year yield advanced less than one basis point to 0.63%.Japan’s 10-year yield declined one basis point to -0.033%.
Commodities
West Texas Intermediate crude fell 0.1% to $52.01 a barrel.Gold weakened 0.2% to $1,580.96 an ounce.LME aluminum decreased 0.1% to $1,720.50 per metric ton.Iron ore gained 2% to $87.80 per metric ton.
--With assistance from Andreea Papuc.
To contact the reporters on this story: Todd White in Madrid at twhite2@bloomberg.net;Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Robert Brand
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2020-02-17 09:34:00Z
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