Daily market review

United States

Hopes for an agreement on a US stimulus package spurred a remarkable bounce in stocks Tuesday, along with similar stimulus in the pipeline from Germany and other major countries. The Dow industrials jumped by 11.4 percent, the S&P 500 rose 9.4 percent, and the NASDAQ rose 8.1 percent.

Signs Tuesday morning that Congress and the White House were nearing a phase-3 relief package expected to total $2 trillion buoyed global risk appetite, and some analysts took up the refrain that the coronavirus selloff has bottomed. Others said the rebound would be short-lived, given the lack of progress in addressing a fast-spreading disease, widespread shutdowns and layoffs, and a chaotic public health response.

Markets reacted bullishly to reports suggesting the Federal Reserve will extend support directly to non-financial firms, alongside a series of more traditional steps to add liquidity and boost the financial sector.

Gains were across the board, with industrials and energy the best performers. Other big gainers included banks, credit cards, precious metals, chemicals, airlines, autos, cruise lines, apparel retailers, and home builders. Underperformers included many sectors that have benefited from the virus fear trade, including consumer staples, big-box retailers, plus home and personal care.

Among companies in focus, big oil rallied, with Chevron up 23 percent, and Exxon Mobil up 13 percent. Financials jumped, with American Express up 21 percent, JP Morgan up 12 percent, and beat-up Boeing up 21 percent. Airlines soared, with United Airlines up 26 percent.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 2 cents to US$27.21, while gold rose US$12.80 to US$1,666.90. The US dollar fell sharply against major currencies. The US Treasury 30-year bond yield rose 3 basis points to 1.39 percent while the 10-year note yield rose 4 basis points to 0.83 percent.


Equities rebounded Monday on aggressive central bank action and stimulus plans from major governments and an expected huge US package. The Europe-wide STOXX 600 rose 8.4 percent, the German DAX rallied 11.0 percent, the French CAC jumped 8.4 percent, and the UK FTSE-100 rose 9.1 percent.

Markets were heartened as well by a slowdown in the number of new cases in Italy's northern region, a virus hot spot. A pledge of more coordinated economic action from the G7 finance ministers and central banks added to the better sentiment.

Leading the gains were basic resources, oil & gas, and travel & leisure, sectors hit hard in the recent selloff. Other leaders included insurance, autos, financial services. Underperforming were food & beverages, health care, telecom, and utilities, but everything was up strongly.

Among companies in focus, British Petroleum rocketed 22 percent. Rio Tinto, the UK miner, rose 5 percent, Cineworld, the UK movie theater chain, soared 32 percent, and Carnival, the UK tour operator, jumped 28 percent. Air France KLM rose 14 percent. Roche, the Swiss pharma, rose 4.6 percent after saying the FDA had approved a trial of its COVID-19 treatment. Anheuser-Busch, the brewer, rose 4.4 percent despite withdrawing its fiscal year guidance.

Markets paid little attention to a batch of weak economic data reflecting the virus impact, including a Eurozone PMI composite figure of just 31.4 in March, a record decline in excess of 20 points from February and a new historic low. For the UK, the composite PMI index was just 37.1, down from a final 53.0 in February and a new record low.

Asia Pacific

Risk appetite improved significantly during Tuesday's Asia-Pacific trading session, with regional markets recording solid and in some cases strong gains on the day. The Federal Reserve's announcement Tuesday that it will purchase Treasuries and mortgage-backed securities "as needed" and reports that the German government is about to unveil additional fiscal stimulus provided some support to investor sentiment. Japanese data published Tuesday, however, provided further evidence of the economic impact of the global coronavirus pandemic, with social disruption caused by the pandemic also continuing to escalate across the region.

Korea's Kospi index was the strongest performer in the region Tuesday, closing up 8.6 percent, with Hong Kong's Hang Seng index and Australia's All Ordinaries index also posting strong gains of 4.5 percent and 4.2 percent respectively. Japan's Nikkei and Topix indices rose to a varying extent, up 7.1 percent and 3.2 percent respectively. Japanese tech company Softbank Group posted very strong gains after it announced large asset sales to reduce debt and fund a share buyback, with Fast Retailing also up sharply. The Shanghai Composite index closed up 2.3 percent.

Flash PMI survey data for Japan published Tuesday are among the first indicators to provide information about the impact of the pandemic on regional activity and sentiment in March. The flash estimate for the Japan manufacturing PMI headline index for March fell to 44.8, its lowest level since 2009 and down from 47.8 in February, while the flash estimate for the services sector was 32.7, a record low and down very sharply from 46.8 previously. Respondents to both surveys reported weaker output, orders, employment, and sentiment. The flash estimate for the composite output index was 35.8 in March, down from 47.0 in February.

Looking ahead*

On Wednesday in Asia/Pacific, BOJ MBD minutes and the New Zealand merchandise trade report are due. In Europe, German Ifo, and UK CPI, PPI and distributive trades figures are scheduled. In North America, US durable goods data and FHFA house price index are on tap.

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