Global stock markets rose on Monday as investors cheered news that more countries and US states were looking to ease lockdowns and the Bank of Japan expanded its stimulus program, while the price of oil continued to crumble as storage runs out.
US energy stocks underperformed the wider market but were still up in New York despite a nearly 25 per cent decline in US crude prices.
The US dollar fell as risk-prone traders cheered lockdown news even as health experts warned that not enough coronavirus testing was in place in the United States.
From Italy to New Zealand, governments announced the easing of restrictions, while Britain said it was too early to relax them there.
The Bank of Japan kicked off a week of central bank meetings by pledging to buy unlimited amounts of government bonds, continuing a trend of historic stimulus announcements to offset the economic effects of the COVID-19 pandemic.
The US Federal Reserve and the European Central Bank meet later in the week, with the ECB expected to increase the size of its bond buying program.
“There will certainly be a tsunami of negative news that will come crashing down on markets and investors. That is consensus. We have that assumption baked in,” said Art Hogan, chief market strategist at National Securities in New York.
“What we don’t know is what the world looks like on the other side of this, and how much of the potential economic damage will be mitigated by the historic policy response.”
The pan-European STOXX 600 index rose 1.77 per cent and MSCI’s gauge of stocks across the globe gained 1.64 per cent.
Oil
Oil prices weakened sharply on continued concern about oversupply and a lack of storage space.
“The market is very concerned about a repeat of negative pricing as the Cushing storage and delivery hub saturates,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London, told the Reuters Global Oil Forum.
“The shift of open interest away from June will have negative consequences for the liquidity of the contract, potentially leading to greater volatility in its price,” he said.
U.S. crude fell 26.21 per cent to $12.50 per barrel and Brent was at $19.56, down 8.77 per cent on the day. – Reuters
