U.S. equities pushed higher for a second day amid continuing optimism the spread of the coronavirus may be slowing in several major economies. Bonds extended declines and the dollar weakened.
The three main American benchmarks all jumped after the S&P 500 Index on Monday closed at its highest since March 13. If the gains are sustained, the S&P 500 may end the day back in a bull market, and likely take the MSCI All-Country World Index with it. The Stoxx Europe 600 Index also advanced, led by travel and leisure shares, after the rate of new infections slowed in France and in Italy, the original epicentre of the continent’s outbreak.
Canada’s main stock index opened higher on Tuesday as a jump in oil prices boosted energy stocks. At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 314.31 points, or 2.31 per cent, at 13,907.01.
The dollar retreated the most since late March. The pound strengthened despite concern for Prime Minister Boris Johnson, who was moved into intensive care as he battled the virus. Oil gained on signs the world’s biggest producers are moving toward a deal to call off their price war.
Riskier assets including stocks and corporate bonds are adding to their remarkable rebound amid the pandemic, after unprecedented and rapid stimulus by the world’s policy and law makers. Yet while fresh impetus came from flattening infection growth in much of Europe and even for two days in New York, data showed sentiment among U.S. small businesses collapsed in March.
As the economic impact of the measures taken to bring the outbreak under control continue to be felt, many market participants warn against expectations of a sustained rally.
“Optimism on the direction of equity markets will be difficult to maintain until we see more clarity on the corporate earnings outlook and until the dispersion of analysts’ forecasts subsides,” Marija Veitmane, a multi-asset strategist at State Street Global Markets, wrote in a note.
Elsewhere, the MSCI Asia Pacific Index rose more than 2 per cent after adding nearly 3 per cent a day earlier. Australia’s dollar rallied and bond yields surged after the country’s central bank signalled that markets are functioning well and continued improvement would allow for a scaling back in purchases of government debt.
Chinese stocks climbed and the yuan strengthened in the wake of further targeted stimulus by policy makers as Shanghai reopened after a long weekend. China said it didn’t have any new deaths for the first time since the pandemic emerged.
With file from Reuters