Economy

Stocks Cut Gains on Virus Fears

Stocks Cut Gains on Virus Fears”

The Stoxx Europe 600 Index advanced 0.3 per cent.

Stock markets turned lower again yesterday after world health authorities declared the virus pandemic that has spread from China to more than a dozen countries a global emergency.

But calm returned after Monday's 8% plunge in Shanghai, despite news that the number of people infected by the virus from China has risen to more than 20,000. Australia's S&P ASX/200 rose 0.5% to 6,959.30, while the Hang Seng in Hong Kong climbed 1.1% to 26,658.53. "Then the market will get steered by data, not opinions, or the herd mentality", Stephen Innes of AxiCorp said in a commentary.

The S&P 500 index climbed 1.2 per cent as of 10:15am as investors in the USA regained an appetite for risk.

The Dow Jones Industrial Average rose 158 points, or 0.6%, in afternoon trading, reversing course from a sharp selloff last week.

Travel and airline stocks led the way lower for the broader market last week, with Carnival and Norwegian Cruise Line among the hardest hit.

Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said traders were bargain-hunting in anticipation of stimulus from the Chinese government. She imagined them saying: "Are you kidding me?"

Gold fell 1%, retreating from a four-week high, as China's efforts to protect its economy from the virus and the injection of 1.2 trillion yuan ($174 billion) worth of liquidity into the markets helped stem inflows into safe-haven assets. An albeit imperfect rule of thumb says a recession may be a year or so away when the three-month Treasury's yield is higher than a 10-year Treasury's.

Prices for the 10-Year U.S. Treasury gave back earlier gains, lowering yields to 1.52% closer to Friday's 1.51%.

More news: Hong Kong suspends four more border crossings to curb spread of virus

"We expect a tough talk in the opening rounds of the Brexit talks", Mr. Rochester said.

Investors were eyeing a busy USA political week.

Shares of Google parent Alphabet Inc gained 3.5 per cent ahead of the company's quarterly results.

Microsoft shares rose 2.4 per cent, leading a 1.3 per cent rise for the S&P 500 technology sector.

The Iowa caucuses are Monday, the first contest to choose a Democratic nominee to run against Donald Trump in November.

Nike jumped 3.9% to help drive Dow Jones Industrial Average higher as investors continue to try to handicap how much its earnings will be hurt by the virus. "But we think this corrective period has a bit more to go". Almost 18% of its revenue last quarter came from China.

Crude oil futures dropped 0.91% at $51.09 per barrel and Brent crude fell 1.55% at $55.74. It tumbled $1.45, or 2.8%, on Monday to settle at $50.11 per barrel on worries about demand.

Overall, stocks have given up some ground after a strong start to the year amid uncertainty over the virus outbreak. Iron ore in China tumbled about 6% and crude oil kept most of Monday's slide of nearly 3%.



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