LONDON: Global equity markets strongly rebounded on Monday as some of the world’s worst-hit countries reported falling coronavirus death rates, while oil prices sank after a meeting of top producers was delayed.
“Global equities are soaring higher as early signs suggest curve flattening is happening in Europe and that US could be a couple weeks behind them,” said Edward Moya, an analyst at OANDA. Key eurozone markets were five per cent or more higher at the close.
“Investors are shrugging off the pessimism,” said AvaTrade analyst Naeem Aslam.
“They are focused on more optimistic things: the slowing death rate caused by coronavirus. Italy, Spain, France, and Germany have all seen declining numbers.” On Wall Street, the Dow Jones index also posted strong gains in the late New York morning, winning more than 1,000 points over Friday’s close.
After news of slowing death cases in Europe, US investor optimism was also fuelled by “early signs that the virus’ intensity in the epicenter of New York may be hitting an apex,” said analysts at Charles Schwab.
London gains were capped by a stronger pound, apparently little affected by news that British Prime Minister Boris Johnson was hospitalised for precautionary tests after suffering “persistent” coronavirus symptoms for 10 days.
‘Worst in 100 years ‘
But even as traders were feeling more optimistic, European governments were reaching for superlatives to describe the economic damage of the pandemic.
The French finance minister said his country was headed for its worst recession since World War II, while German leader Angela Merkel said the virus outbreak was the biggest challenge ever for the European Union.
“The coronavirus may trigger annual GDP declines among the worst seen in the last 100 years,” analysts at Oxford Economics said.
Meanwhile, the commodities’ markets attention was on a planned meeting of Opec and other key crude producers aimed at easing a supply glut that had sent oil prices crashing. Both main contracts had soared last week as Trump said Saudi Arabia and Russia would hold talks on ending their price war, while it also emerged Opec would be holding a teleconference on Monday.
However, investors were dealt a blow over the weekend when the meeting was delayed to Thursday.
Analysts warned there were doubts that the US would take part in them, which could be a major sticking point for Moscow and Riyadh.
But even if a deal is reached, there is scepticism that suggested cuts of 10 million barrels a day will be enough to help the oil market, owing to a collapse in demand caused by the pandemic.
Published in Dawn, April 7th, 2020