Wall Street was set to open higher on Tuesday, following broad gains across Europe and Asia after a modest rebound in Chinese exports buoyed investor sentiment.
Futures trade pointed to gains of more than 1 per cent when markets open in New York, ahead of a raft of US earnings reports that will provide a further glimpse into the impact of the pandemic.
JPMorgan Chase, the first bank to report on earnings this week, revealed profits fell 69 per cent in the first quarter as it increased provisions for potential losses on loans to customers hit by the crisis.
The Stoxx Europe 600 was up 0.6 per cent in early afternoon, having briefly risen 1.3 per cent at the open. Frankfurt’s Dax 30 rose 1 per cent while London’s FTSE 100 was the only major index down, 0.7 per cent lower. The UK government indicated there were no immediate plans to ease lockdown measures.
European stocks edged higher after data showed 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.
But 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”.
Ahead of the Wall Street open, the S&P 500 has recovered much of its losses since plunging in late February and early March on optimism that the damage being wrought by the virus was nearing its peak. The large-cap benchmark is currently sitting 18 per cent off all-time highs.
“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 following the sweeping intervention by the Federal Reserve — notably a $2.3tn liquidity injection. But some analysts are sceptical this will be a sufficient to tackle the pandemic in the long run.
“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.”
Oil prices gave up earlier gains as concerns lingered over whether a record US-backed Opec deal to cut supply would be enough to offset the global crude glut. Brent crude, the international benchmark, fell 2 per cent to $31.11 a barrel while US marker West Texas Intermediate was down 4.8 per cent at $21.40.
The yield on 10-year US Treasuries was little changed at 0.750 per cent.
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April 14, 2020 at 07:31PM
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Wall Street set to follow European and Asian bourses higher - Financial Times
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