World stock markets bounced back on Wednesday, even as deaths from China’s new virus rose to 17, while oil prices tumbled as a market surplus forecast alleviated supply concerns.
Worries about contagion of the virus and its effect on the global economy, particularly as millions travel for upcoming Lunar New Year festivities, had knocked the world’s top equity markets off record peaks.
Official newspaper China Daily on Wednesday said 544 cases had now been confirmed in the country. Cases of the previously unknown, flu-like coronavirus have emerged as far away as the United States.
The outbreak revived memories of the Severe Acute Respiratory Syndrome (SARS) epidemic in 2002-03, a virus outbreak that killed nearly 800 people worldwide and hit Hong Kong’s economy particularly hard.
Though Hong Kong confirmed its first case, measures are now in place to minimize public gatherings in the most affected regions.
“The call here is not that the virus is done or nipped in the bud by any means,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets. “But there have been no big further reported outbreaks, and the response from the Chinese authorities has been very, very positive.”
Germany’s DAX touched an intraday record high but ended the day down 0.3 per cent. Italy’s benchmark fell after reports the leader of its co-governing 5-Star movement had resigned.
Italian government bonds saw their biggest sell-off in a month. Yields, a proxy of the country’s borrowing costs, jumped as investors wondered whether the country’s fragile coalition would collapse.
Across the Atlantic, Canada’s main stock index scaled an all-time peak on Wednesday after the central bank maintained its key overnight interest rate but opened the door to a possible cut should a slowdown in Canadian growth drag on.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 27.58 points, or 0.16 per cent, at 17,599.86.
The Bank of Canada has held interest rates steady since October 2018 even as several of its international counterparts have eased monetary policy.
Data by Statistics Canada earlier showed the country’s annual inflation rate held steady at 2.2 per cent in December, supported by higher energy prices and balanced out by slower cost gains in food and cars.
The interest rate sensitive financials sector was up 0.3 per cent.
The energy sector dropped 0.8 per cent as crude prices slid, while the materials sector, which includes precious and base metals miners and fertilizer companies, finished down 0.1 per cent.
Leading the index were Aphria Inc., up 7.9 per cent, Centerra Gold Inc., up 3.8 per cent, and First Quantum Minerals Ltd., higher by 3.7 per cent.
Lagging shares were Ballard Power Systems Inc., down 8.8 per cent, Enerplus Corp., down 4.9 per cent, and Spin Master Corp., lower by 4.2 per cent.
In New York, the S&P 500 hit a record high boosted by waning fears over the coronavirus. An airline stock index rose 1.0 per cent after falling as much as 3.8 per cent on Tuesday.
IBM rallied 3.4 per cent after better-than-expected full-year profits, while streaming giant Netflix warned the next few months would be tougher and its stock fell 3.1 per cent.
The Dow Jones Industrial Average fell 9.02 points, or 0.03 per cent, to 29,187.02, the S&P 500 gained 1.02 points, or 0.03 per cent, to 3,321.81 and the Nasdaq Composite added 12.96 points, or 0.14 per cent, to 9,383.77
The pan-European STOXX 600 index lost 0.08 per cent and MSCI’s gauge of stocks across the globe gained 0.25 per cent. Emerging market stocks rose 0.63 per cent.
Overnight, the coronavirus developments boosted Shanghai stocks from an early 1.4 per cent drop to end higher. Japan’s Nikkei, South Korea’s Kospi index and Hong Kong’s Hang Seng all rose by more than half a percentage point.
Companies across China are handing out masks and warning staff to avoid the central city of Wuhan amid fears that the virus will rapidly spread as much of the population embarks on travel for Lunar New Year holidays.
The dollar index rose 0.05 per cent, with the euro up 0.03 per cent to $1.1085.
The Japanese yen strengthened 0.01 per cent versus the greenback at 109.88 per dollar, while Sterling was last trading at $1.3124, up 0.59 per cent on the day.
Oil prices fell sharply as traders figured a well-supplied global market would be able to absorb disruptions that have cut Libya’s crude production.
Brent crude ended the session down $1.38, or 2.1 per cent, at $63.21 while West Texas Intermediate fell $1.64, or 2.8 per cent, to settle at $56.74.
U.S. 2-year, 10-year and 30-year yields were little changed but earlier hit fresh two-week lows after the Bank of Canada held interest rates steady and opened the door for possible easing amid an economic slowdown, rekindling worries about global growth.
“Going into this year, the belief was that global easing was over and things were looking better for the entire world,” said Jim Vogel, senior rates strategist at FHN Financial in Memphis.
“For Canada to sort of change its outlook fairly quickly opens up the possibility that easing could occur elsewhere too,” he added.
Benchmark 10-year notes last rose 1/32 in price to yield 1.7673 per cent, from 1.769 per cent late on Tuesday.
Spot gold fell 0.07 per cent to $1,557.84 an ounce. U.S. gold futures gained 0.01 per cent to $1,556.50 an ounce. Copper lost 0.92 per cent to $6,103.50 a tonne.
Reuters