Daily market review

United States

Surging oil prices lifted energy stocks to help major indexes gain Thursday in seesaw trading after President Trump's bombshell announcement that Saudi Arabia and Russia have agreed to slash oil output. Some analysts were skeptical about Trump's claim, but there were also reports of calls for an emergency OPEC meeting. The Dow industrials rose 2.2 percent, the S&P 500 gained 2.3 percent, and the NASDAQ was up 1.7 percent.

Pandemic fallout was the other focus after a higher-than-expected 6.65 million filed initial US jobless claims in the March 28 week, double the previous week's already unprecedented level. On the positive side, the Fed's decision to ease leverage rules for big banks offered support, but on the negative side, many banks are expected to shun the federal loan program for small business. Meanwhile, expectations for another round of fiscal stimulus have faltered amid opposition from Senate Republicans.

In other pandemic-related news, many companies continue to withdraw business guidance, draw down credit lines, suspend dividends, lay off workers, and some are expected to suspend share buybacks, a distinct negative.

Among sectors, in addition to oil & gas, outperformers included utilities, consumer staples, and health care. Consumer discretionary and real estate were the only losing sectors. Among companies, Chevron rose 11 percent, ExxonMobil was up 7.6 percent, and Haliburton gained 14 percent.

In company news, Dow member Walgreens Boots (down 6 percent) pulled its guidance while American Airlines (down 5.9 percent) tapped its credit line, and Boeing (down 5.7 percent), another big Dow stock, was reportedly planning layoffs.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rocketed by US$4.96 to US$29.85, while gold rose US$25.26 to US$1,614.87. The US dollar rose against most major currencies. The US Treasury 30-year bond yield rose 4 basis points to 1.26 percent while the 10-year note yield was up 3 basis points to 0.61 percent.


Strong energy stocks offset weakness elsewhere to help major indexes edge up Thursday. The Europe-wide STOXX 600 rose 0.4 percent, the German DAX gained 0.3 percent, the French CAC also rose 0.3 percent, and the UK FTSE-100 was up 0.5 percent.

On the negative side were reports that Italy has undercounted its virus cases and deaths, while Spain's deaths rose to 950 over 24 hours, and deaths accelerated in France.

President Trump's announcement that Russia and Saudi Arabia had agreed to deep output cuts sent oil prices soaring. Big oil stocks rallied, including Royal Dutch Shell, up 8.5 percent, and BP, up 5.9 percent. Basic resources also outperformed, along with telecom, insurance, and consumer staples. Lagging were travel & leisure, technology, retail, financial services, media, and technology.

Asia Pacific

Major Asian markets posted mixed results Thursday, with the regional data calendar light and incoming news on the global coronavirus pandemic still the main focus for regional investors. China and Singapore reported new coronavirus cases that had been "imported" from other countries, while Japanese authorities warned that cases there could increase sharply in coming days. A spike in global oil prices late in the Asian trading session also helped to drive some of the price action.

The Shanghai Composite index was among the strongest regional performers Thursday, closing up 1.7 percent, while Hong Kong's Hang Seng index advanced 0.8 percent. Japan's Nikkei and Topix indices closed down 1.4 percent and 1.6 percent respectively. Australia's All Ordinaries index fell 1.9 percent on the day, with major banks down sharply on concerns that Australian authorities might follow the lead of the Bank of England and the Reserve Bank of New Zealand and push for bank dividend payments to be suspended.

The Markit India Manufacturing PMI's headline index fell from 54.5 in February to 51.8 in March, its lowest level since last November. Although India's economy is relatively less exposed to shifts in global trade flows compared with other economies in the region, the survey indicates that the global coronavirus pandemic has had an impact on the manufacturing sector, with respondents reporting the biggest drop in new export orders since 2013, longer delivery times from suppliers, and a sharp drop in business confidence. The survey also shows that output and new orders grew at a slower pace in March, while employment growth was steady but subdued.

Looking ahead*

On Friday in Asia/Pacific, Japan PMI composite, Singapore PMI, Australian retail sales, and Chinese services PMI reports are due. In Europe, French, German, UK, and Eurozone PMI composite figures, and the Eurozone retail sales report are scheduled. In US data, the monthly employment situation and non-manufacturing ISM reports are on tap.

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