US equity futures jumped alongside stocks in Europe and Asia after the reported death tolls in some of the world's coronavirus hot spots showed signs of easing over the weekend. The dollar was steady and Treasuries fell.
Contracts on all three main American gauges rallied after New York state fatalities fell for the first time and US president Donald Trump said he sees signs the pandemic is beginning to level off.
The Stoxx Europe 600 Index jumped led by automakers and travel and leisure shares after Italy and Spain said they had the fewest deaths in more than two weeks, and Germany and France reported the lowest numbers in days.
The upbeat tone follows another negative week, and the mood among investors remains divided.
Bulls are pointing to more attractive valuations, unprecedented stimulus and now slowing death rates in several major countries.
Bears are fretting the continued spread of the disease, dismal economic data and the rising corporate costs of the pandemic and subsequent shutdown.
“We are still optimistic that the administration will be able to get this virus under control and reopen the economy by the end of April, early May,” Lindsey Piegza, chief economist at Stifel Nicolaus and Co, said on Bloomberg TV.
“If that does occur, it’s likely that we’re able to control the downturn from a depressionary scenario into a recessionary scenario.”
In Asia, Japan’s benchmark ended almost 4 per cent higher even as that country moved closer to declaring a state of emergency. The yen dropped as haven demand receded. Shares in Hong Kong rose while Shanghai was closed for a holiday.
Elsewhere, crude oil pared a decline of as much as 11 per cent though it remained lower as uncertainty swirled over a proposed meeting of the world’s top producers.
The pound fluctuated before turning higher even as UK prime minister Boris Johnson was admitted to hospital for tests after suffering from the coronavirus for 10 days.
In Europe, the benchmark STOXX 600 index was up 2.9 per cent in early trade, after ending Friday with its sixth weekly decline in seven as the health crisis stalled business activity.
Italian and French bourses jumped 3.5 per cent and 3.4 per cent, respectively, as data showed Italy reported its lowest daily death toll for more than two weeks on Sunday, while France’s death toll dropped and admissions into intensive care slowed.
In Dublin, the benchmark Iseq all-share index rose 3.06 per cent with banking stocks among gainers.
Slump
The STOXX 600 index has lost more than $3 trillion in market value since February as the slump in economic activity brought many sectors to the verge of collapse, forcing companies to suspend dividends and share buyback to shore up cash.
Yields on safe-haven German government bonds crept higher on Monday, meanwhile, but the selloff was modest, reflecting heightened uncertainty triggered by the virus outbreak and significant damage inflicted on the economy.
"With aggressive policies of social distancing and testing (and good healthcare systems), there is light at the end of the tunnel," said Erik Nielsen, group chief economist at UniCredit, said in a note. "But now the bad news: It's still a long tunnel."
Analysts note that the United States and Britain are still yet to see a peak in terms of coronavirus cases, while countries in Asia that had successfully managed to control the first stage of the virus outbreak are now battling a second wave.
The toll the lockdowns will have on economic growth globally, alongside massive central bank easing, suggested bond yields would remain low for some time, they said.
In early Monday trade, most bond yields in top-rated euro zone countries rose around 2-3 basis points . – Reuters / Bloomberg
