NEW YORK/LONDON (Reuters) – The dollar slid and global equity markets marched higher on Wednesday, poised for a second day of gains on optimism $2 trillion in U.S. fiscal stimulus will dampen the economic shock the coronavirus pandemic already has started to inflict.U.S. senators will vote Wednesday. Top aides to Republican President Donald Trump and senior Republican and Democrat senators agreed on the unprecedented bill after five days of marathon talks.
Hopes the bill, which is nearly half the $4.7 trillion the U.S. government spends annually, will ease an expected recession lifted world stock indexes .MIWD00000PUS for back-to-back gains for the first time since markets sold off a month ago.
Europe’s main markets in London, Frankfurt and Paris were struggling to stay positive after ripping 4%-5% higher and oil prices swung from 3% up to 3% down. Wall Street also teetered though it mostly remained more than 1% higher. [.EU][.T][.N]
The Dow Jones Industrial Average .DJI soared more than 11% on Tuesday in its biggest single-day percentage gain since 1933 and the benchmark S&P 500 jumped 9.4% – its tenth best day on record out of 24,067 trading sessions since a daily data series started in 1927.
The stimulus package marks progress but the devil’s in the details, said Ron Temple, head of U.S. equity at Lazard Asset Management in New York. The legislation is not available to read to know how it will be executed or when money arrives at households and small businesses gain access to funding, he said.
“This is not the all-clear; it’s just material progress,” Temple said.
“Until we know we can go back to work safely, that we can go to restaurants and go to stores and engage with other humans in close proximity, I don’t think you can make an economic or a market call. It’s premature to be trying to call the bottom.”
The stimulus includes a $500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 apiece to millions of U.S. families.
It will also include $350 billion for small-business loans, $250 billion for expanded unemployment aid and at least $100 billion for hospitals and related health systems.
Countries that have locked down their populations to prevent the spread of the coronavirus need to use the time to find and attack the virus, the World Health Organization said.
As the United States works to screen thousands for the coronavirus, a new blood test offers the chance to find out who may have immunity – a potential game changer in the battle to contain infections and get the economy back on track.
Over 450,000 people have been infected globally and more than 20,000 have died, according to a Reuters tally.
Data on Wednesday pointed to a fast-slowing economy that analysts said signaled the United States already is in recession.
FILE PHOTO: The floor of the New York Stock Exchange (NYSE) stands empty as the building prepares to close indefinitely due to the coronavirus disease (COVID-19) outbreak in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson
New orders for key U.S.-made capital goods fell sharply in February as demand for machinery and other products slumped, suggesting a deepening contraction in business investment.
The benchmark S&P 500 is still nearly $8 trillion below its mid-February high, and investors expect more sharp swings. Wall Street’s fear gauge eased overnight but was on the rise again ahead of Wednesday’s open. [.N]
MSCI’s gauge of stocks across the globe .MIWD00000PUS surged 2.65% and emerging market stocks rose 4.32%.
The pan-European STOXX 600 index rose 0.96%.
The Dow Jones Industrial Average .DJI rose 661.9 points, or 3.2%, to 21,366.81. The S&P 500 .SPX gained 35.76 points, or 1.46%, to 2,483.09 and the Nasdaq Composite .IXIC added 34.47 points, or 0.46%, to 7,452.33.
In the currency markets, the dollar slipped for a third straight session as a scramble for liquidity was soothed by the super-sized U.S. stimulus plan, though it was starting to look a little stronger again. [/FRX]
The dollar index =USD fell 0.216%, with the euro EUR= up 0.44% to $1.0834. The Japanese yen JPY= weakened 0.24% versus the greenback at 111.51 per dollar.
The risk-sensitive Australian dollar AUD=D3 jumped over the 60-U.S. cent mark for the first time in a week.
Bond markets were also calmer. Benchmark U.S. Treasuries were yielding 0.7987% while in Europe Germany’s 10-year yield DE10YT=RR edged a basis point higher to -0.296%, tailed by other higher-rated government debt. NL10YT=RR, AT10YT=RR
European Central Bank chief Christine Lagarde asked euro zone finance ministers during a videoconference on Tuesday to seriously consider a one-off joint debt issue of “coronabonds”, officials told Reuters.
In metals markets, gold changed hands at $1,608.78 an ounce XAU=, retaining most of Tuesday’s gains of almost 5%, its biggest jump since 2008.
U.S. crude prices rose slightly, bolstered by progress on a massive pending U.S. economic stimulus package.
Brent crude LCOc1 gained 24 cents to settle at $27.39 a barrel. U.S. crude CLc1 futures rose 48 cents to settle at $24.49 a barrel.
FILE PHOTO: People wearing protective face masks, following an outbreak of the coronavirus disease (COVID-19), look at a stock quotation board outside a brokerage in Tokyo, Japan, March 10, 2020. REUTERS/Stoyan Nenov
GRAPHIC: Global equities post first back-to-back gain during virus sell-off – here)
Reporting by Herbert Lash; Editing by Bernadette Baum and Lisa Shumaker
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Herbert Lash
Reuters
