Hoping that an incoming $ 2 trillion fiscal stimulus will ease the economic devastation caused by virus blockages lifted the world stock market indexes .MIWD00000PUS for a second day after historic gains Tuesday, but investors refrained from calling a hollow.
The main European markets of London, Frankfurt and Paris struggled to remain positive after plummeting from 4% to 5% and oil prices fell from 3% to 3%. Wall Street also faltered, but it remained mostly over 1% higher.
The Dow Jones Industrial Average .DJI climbed more than 11% on Tuesday in its biggest one-day percentage gain since 1933, and the S&P 500 benchmark jumped 9.4% – its tenth best day on record 24,067 trading sessions since the start of a daily data series in 1927.
The stimulus package is progressing, but the devil is in the details, said Ron Temple, head of US equities at Lazard Asset Management in New York. Legislation is not available to read how it will be enforced or when the money will reach households and small businesses will have access to finance, he said.
“It’s not clear, it’s just material progress,” said Temple.
“Until we know we can go back to work safely, that we can go to restaurants and go to shops and chat with other humans nearby, I don’t think you can make a call economic or commercial. It is premature to try to call the bottom. ”
The stimulus package includes a $ 500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $ 3,000 each to millions of American families.
It will also include $ 350 billion for small business loans, $ 250 billion for expanded unemployment assistance and at least $ 100 billion for hospitals and related health systems.
US senators will vote on Wednesday. Key contributors to Republican President Donald Trump and Republican and Democratic senators have agreed to the unprecedented bill, which accounts for almost half of the $ 4.7 trillion the U.S. government spends each year after five days of marathon talks.
The data indicated a rapid economic slowdown, which analysts said signaled that the United States was already in recession.
New orders for key US-made capital goods fell sharply in February, as demand for machinery and other products plummeted, suggesting further contraction in business investment.
The S&P 500 benchmark is still close to $ 8 trillion below its mid-February high, and investors expect sharper swings. Wall Street’s fear gauge eased overnight, but increased again before Wednesday’s opening.
The MSCI World Equity Index .MIWD00000PUS jumped 2.65% and emerging market stocks rose 4.32%.
The pan-European STOXX 600 index increased by 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 consecutive session, while the liquidity rush was quelled by the large US stimulus package, even though it was starting to look a little stronger.
The dollar = USD index was down 0.216%, the EUR = up 0.44% to $ 1.0834. The Japanese yen JPY = fell 0.24% against the greenback to 111.51 per dollar.
The risk-sensitive Australian dollar AUD = D3 surged above the 60 United States. hundred for the first time in a week.
The bond markets were also quieter. The benchmark US Treasuries posted a return of 0.7987% while in Europe, Germany’s 10-year yield DE10YT = RR rose slightly by -0.296%, followed by other better public debt noted. NL10YT = RR, AT10YT = RR
European Central Bank chief Christine Lagarde asked eurozone finance ministers on videoconference on Tuesday to give serious thought to a single joint issue of “coronabond” debts, officials told Reuters.
In the metal markets, gold changed hands to $ 1,608.78 an ounce XAU =, holding most of Tuesday’s gains close to 5%, its biggest jump since 2008.
Oil prices have plummeted despite the pending massive US economic stimulus package, the coronavirus pandemic having affected fuel demand in the United States, as traders prepare for further declines.
Brent LCOc1 crude fell 17 cents, or 0.6%, to $ 26.98 a barrel. The US CLc1 futures contract fell 21 cents, or 0.9%, to $ 23.80 a barrel.
Reporting by Herbert Lash; Editing by Bernadette Baum
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