Coronavirus hopes propel stocks, euro higher


LONDON (Reuters) – World stock markets enjoyed a second day of sharp gains on Tuesday as signs of progress against the coronavirus in both Europe and the United States and more liberal helpings of stimulus kept investors charging back in.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, April 6, 2020. REUTERS/Staff/File Photo

There was an added boost from commodity markets as oil climbed nearly 3% on supply cut hopes, while currency markets also came alive as a tumbling dollar saw the euro race out of a six-session rut of falls.

Equities was were the main action was however. Japan’s Nikkei followed up Wall Street’s 7% surge on Monday [.N] with a 2% jump as its government promised a near $1 trillion stimulus package – equal to a fifth of its GDP.

Europe quickly got in the swing of things too. The pan-European STOXX 600 index climbed over 3% as the respective markets in London, Frankfurt, Paris and Milan all bounded higher.

“A day does not a trend make, a week does not a trend make… but we think the market is bottoming out,” said Jeff Mortimer, Director of Investment Strategy at BNY Mellon Wealth Management.

“We are trying to get clients to understand that (in market performance terms) better times ahead can come more quickly then you expected.”

Worldwide, the virus has infected more than 1.3 million people and killed over 74,000, and though the numbers are still rising in many highly-populated countries, some tentative improvements have given hope.

In hardest-hit Italy and Spain, authorities have started looking ahead to easing lockdowns after steady falls in fatality rates. In the United States too, the daily number of deaths in the country’s worst-affected area, New York, has also shown signs of steadying.

The U.S. dollar, which has been soaking up safe-haven flows for weeks, slipped against most major currencies.

The euro shot up 0.7% to $1.0865 to snap a six-day run of falls, the pound climbed despite Britain’s Prime Minister remaining in intensive care, and the Australian dollar jumped over 1.5% to its highest in a week.

New Zealand’s dollar rose 1.3% too, while the Japanese yen shook off an early dip to clamber up to 108.92 per U.S. dollar. [/FRX]

It wasn’t only oil driving commodities markets higher either, copper punched up to a 3-week high with a 3% gain for industrial metals, while safe-haven gold wilted.

Benchmark 10-year U.S. Treasuries and German Bund continued to lose out too. U.S. yields – which move inverse to price – rose to 0.73% having fallen almost 9 basis points on Monday, and Bund yields were up 6-9 basis points across the curve.

The Eurogroup of finance ministers within the single euro zone currency bloc are scheduled to meet later on Tuesday, and analysts expect more joint action to help prop up the economies of member states.

Cyprus, one of the lower-rated countries in the bloc, is marketing a seven-year and 30-year bond issuance. In Asia Indonesia issued a 50-year bond.

“Investors have recently been detecting growing public support for the concept of coronabonds in European Commission and ECB circles,” said DZ Bank analyst Daniel Lenz, adding that German ECB Executive Board member Isabel Schnabel was among those who appeared to voice support.

Additional reporting by Abhinav Ramnarayan in London; Editing by Peter Graff



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Oil skids on oversupply fears, stocks jump on virus slowdown By Reuters


© Reuters. FILE PHOTO: A pump jack operates in front of a drilling rig at sunset in an oil field in Texas

By Swati Pandey

SYDNEY (Reuters) – Oil prices skidded on Monday after Saudi-Russian negotiations to cut output were delayed, keeping oversupply concerns alive, while stocks jumped as investors were encouraged by a slowdown in coronavirus-related deaths and new cases.

In currency markets, sterling fell after British Prime Minister was admitted to hospital following persistent coronavirus symptoms as the pandemic rapidly spreads.

Brent crude () fell as much as $3 in early Asian trading after Saudi Arabia and Russia postponed a meeting over a potential pact to cut production to Thursday. [O/R]

Analysts said the news could lead to some sell-off in currency markets too.

Also weighing on the pound were fears other senior government officials who were in the same briefing as Prime Minister Boris Johnson could be affected by the virus, said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, Canada.

The pound fell 0.4% in early trade on Monday in a knee-jerk reaction and was last down 0.3% at $1.2222.

“It is stating the obvious to say the viral outbreak and the containment measures to fight it are central to market action,” said Michael McCarthy, chief market strategist at CMC Markets.

Indeed, equity investors looked at the positives with major European nations including France and Italy reporting lower fatality rates.

U.S. stock futures () jumped more than 1.5% in early Asian trading on Monday after U.S. President Donald Trump expressed hope the country was seeing a “levelling off” of the coronavirus crisis.

The gains came despite New York Governor Andrew Cuomo cautioning that it was not yet clear whether the crisis in the state had reached a plateau.

Investors took solace from the fact that COVID-19 cases appeared to be reaching a peak in Europe with Italy seeing the number of patients in intensive care falling for the second consecutive day.

In Asia, Australia’s benchmark index () added 0.5%, Japan’s Nikkei was up 0.2% () while South Korea’s KOSPI index () climbed 1.4%.

That left MSCI’s broadest index of Asian shares outside of Japan () up 0.1%. China markets were closed for a public holiday.

“Focus in markets will now turn to the path out of lockdown and to what extent containment measures can be lifted without risking a second wave of infections,” National Australia Bank analyst Tapas Strickland wrote in a note.

“Key to a strong rebound in China will be the ongoing lifting of containment measures with Wuhan – the epicentre of the outbreak – set to lift containment measures on April 8.”

Strickland, however, noted many in China were still subject to social distancing and isolation restrictions to prevent a resurgence in infections.

The pandemic has claimed more than 64,000 deaths as it further exploded in the United States and the death toll climbed in Spain and Italy, according to a Reuters tally.

Concerns about heavy damage to the global economy have pushed investors into the perceived safety of government bonds where yields are at or near all-time lows. [US/]

Elsewhere in currencies, the dollar was up a touch against the yen at 108.58. . The euro () was barely moved at $1.0803 while the risk sensitive Australian dollar was up 0.2% at $0.6004.

In commodities, Brent crude futures () slipped 6.2%, or $2.13, to $31.98 a barrel while U.S. crude () dived 7.4%, or $2.12, to $26.12. [O/R]

was down 0.2% at $1,612.9 an ounce.



Wall St. looks for light at end of tunnel, sees risk stocks will re-test lows By Reuters


© Reuters. FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City

By Megan Davies

NEW YORK (Reuters) – Wall Street analysts and investors see a risk that stocks could retest recent lows in the coming days or weeks as they worry about the spread of the virus and its impact on the economy, although some spot glimmers of light at the end of the tunnel.

Wall Street’s main indexes fell more than 1.5% on Friday as the coronavirus abruptly ended a record U.S. job growth streak. The S&P 500 () closed at 2,488.65, after rebounding about 13% from its intra-day late-March low, although it is still down more than 26% from its mid-February record high.

Markets have shown some signs of stabilization as investors parse a broad range of signals for clues on the trajectory they may take in coming weeks.

Some point to easing volatility and improving liquidity in fixed-income markets as signs that the worst of the sell-off may be over. Investor sentiment, often seen as a contrarian indicator, is one signal pointing to an eventual turnaround in U.S. stocks. Still, markets remain turbulent and far off their highs.

U.S. Surgeon General Jerome Adams warned on Fox News Sunday that “this is going to be the hardest and the saddest week.”

However, there have been some positive signs. New York Governor Andrew Cuomo said deaths had fallen slightly from the prior day, even though he cautioned that it was not yet clear whether the crisis in the state was reaching a plateau.

Michael Hewson at online trading company CMC Markets said that U.S. futures may get a lift on Sunday by a “fall in the death rate in NY” and some other places. U.S. futures were up more than 1 percent soon after opening on Sunday.

Here is a roundup of some analyst and investor views from the past few days:

– Julian Emanuel at U.S. broker-dealer BTIG said in a research note on Sunday that if history is any sort of guide, he expects a “retest of the March lows in April, as the public health and economic bad news is likely to reach its parabolic peak.”

Emanuel said that part of what could make a bottom for stocks in the coming days is a realization that the real reopening date for the economy is not the end of April but rather the end of May.

Emanuel added that stocks often trough “when the headlines are most adverse, hope scarce, and emotions high” and said that as investors, “we want to be ready for that time, and we think it is coming in April.”

Emanuel pointed to one “uncommon phenomenon indicative of systemic hedging,” saying the S&P 500 , which measures volatility, is currently above the VIX, which is “usually reserved for times of market stress.”

– Whitney Tilson, founder and CEO of Empire Financial Research, a publisher of investment newsletters, who previously ran hedge fund Kase Capital, said in an email on Sunday that he believes New York City “stopped the rapid spread of the virus around March 19,” and that the number of new cases is now in decline. Tilson said data that NYC Health was releasing on new cases gave a more hopeful picture.

– Christopher Wood at Jefferies wrote in a research note dated Friday that they are still expecting, at a minimum, “a re-test of the previous low on the S&P 500”, as well as a re-test of the 10-year Treasury bond yield low, and forecasts that will coincide with a renewed rally in the U.S. dollar.

Wood wrote that “markets are heading into the peaking of the bad news in Europe at the same time as cases in Britain and America, both behind in terms of the virus cycle because of the failure to lockdown earlier, continue to rise sharply,” Wood wrote. “This news flow is likely to unnerve investors in the short-term for understandable reasons.”

Still, Woods said “when that peaking out does occur, it should generate a decent tradeable rally.”

Jefferies equity strategist Steven DeSanctis, however, in a separate note said, said that hedge funds’ de-risking “seems to be behind us.”

– Andrew Slimmon, managing director and senior portfolio manager on all long equity strategies at Morgan Stanley (NYSE:) Investment Management, said in emailed comments from a podcast on Friday that he also expects some “retest of the lows” but said it is possible that “we will not get back to the lows.”

He charts three stages of bear markets – the “panic low,” the “relief rally” and the “retest” and said the market is currently in the second stage. He sees financial services and consumer stocks as areas that are particularly attractive.

– Brad McMillan, chief investment officer for Commonwealth Financial Network, wrote in emailed comments on Friday that “April is going to be a tough one, with lots of real — and very scary — headlines. The market will certainly respond to those headlines, so we should expect more volatility and quite possibly a retest of the March lows.”

– Michael Purves, at Tallbacken Capital Advisors, wrote on Friday that the VIX curve appears to be reflecting a few high-level but important scenarios/risks, of rolling U.S. blackouts as incremental populations get hot, and that U.S. health policy is less cohesive than it is in other countries.

Purves also said there is “an ever growing number of second order impacts from this economic shut down which may not reveal themselves for several months (fiscal stimulus implantation risks, food inflation, labor strikes, rising political risk, unsuccessful reboot of Asian economies, re-outbreak of Corona cases etc.)”

(This story was refiled to add that Morgan Stanley comments were from a podcast)



France stocks lower at close of trade; CAC 40 down 1.57% By Investing.com


© Reuters. France stocks lower at close of trade; CAC 40 down 1.57%

Investing.com – France stocks were lower after the close on Friday, as losses in the , and sectors led shares lower.

At the close in Paris, the declined 1.57%, while the index fell 1.67%.

The best performers of the session on the were Carrefour SA (PA:), which rose 6.08% or 0.86 points to trade at 15.09 at the close. Meanwhile, Publicis Groupe SA (PA:) added 4.22% or 1.10 points to end at 27.16 and Sanofi SA (PA:) was up 2.37% or 1.88 points to 81.36 in late trade.

The worst performers of the session were WFD Unibail Rodamco NV (AS:), which fell 9.05% or 4.50 points to trade at 45.22 at the close. Safran SA (PA:) declined 8.16% or 5.60 points to end at 63.00 and Societe Generale SA (PA:) was down 8.15% or 1.14 points to 12.80.

The top performers on the SBF 120 were Carrefour SA (PA:) which rose 6.08% to 15.09, Tarkett (PA:) which was up 5.94% to settle at 9.01 and Eutelsat Communications SA (PA:) which gained 4.47% to close at 9.62.

The worst performers were Natixis (PA:) which was down 18.72% to 1.84 in late trade, CNP Assurances SA (PA:) which lost 9.53% to settle at 8.07 and WFD Unibail Rodamco NV (AS:) which was down 9.05% to 45.22 at the close.

Falling stocks outnumbered advancing ones on the Paris Stock Exchange by 348 to 230 and 72 ended unchanged.

Shares in WFD Unibail Rodamco NV (AS:) fell to 5-year lows; falling 9.05% or 4.50 to 45.22. Shares in Societe Generale SA (PA:) fell to 5-year lows; down 8.15% or 1.14 to 12.80. Shares in WFD Unibail Rodamco NV (AS:) fell to 5-year lows; falling 9.05% or 4.50 to 45.22.

The , which measures the implied volatility of CAC 40 options, was up 3.16% to 43.18.

Gold Futures for June delivery was up 0.44% or 7.15 to $1644.85 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in May rose 6.71% or 1.70 to hit $27.02 a barrel, while the June Brent oil contract rose 9.49% or 2.84 to trade at $32.78 a barrel.

EUR/USD was down 0.62% to 1.0789, while EUR/GBP rose 0.75% to 0.8824.

The US Dollar Index Futures was up 0.60% at 100.875.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



France stocks higher at close of trade; CAC 40 up 0.33% By Investing.com


© Reuters. France stocks higher at close of trade; CAC 40 up 0.33%

Investing.com – France stocks were higher after the close on Thursday, as gains in the , and sectors led shares higher.

At the close in Paris, the added 0.33%, while the index added 0.44%.

The best performers of the session on the were Peugeot SA (PA:), which rose 4.26% or 0.48 points to trade at 11.86 at the close. Meanwhile, Bouygues SA (PA:) added 4.02% or 0.98 points to end at 25.35 and Publicis Groupe SA (PA:) was up 3.45% or 0.87 points to 26.06 in late trade.

The worst performers of the session were Dassault Systemes SE (PA:), which fell 5.10% or 6.75 points to trade at 125.70 at the close. Capgemini SE (PA:) declined 4.51% or 3.32 points to end at 70.30 and Accor SA (PA:) was down 4.05% or 0.97 points to 23.00.

The top performers on the SBF 120 were CGG SA (PA:) which rose 20.63% to 1.008, TechnipFMC PLC (PA:) which was up 15.40% to settle at 6.83 and Vallourec (PA:) which gained 15.10% to close at 1.170.

The worst performers were Natixis (PA:) which was down 11.74% to 2.27 in late trade, Quadient SA (PA:) which lost 9.03% to settle at 14.10 and SEB SA (PA:) which was down 7.31% to 107.70 at the close.

Falling stocks outnumbered advancing ones on the Paris Stock Exchange by 303 to 271 and 74 ended unchanged.

The , which measures the implied volatility of CAC 40 options, was down 6.57% to 41.85.

Gold Futures for June delivery was up 2.83% or 45.00 to $1636.40 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in May rose 24.32% or 4.94 to hit $25.25 a barrel, while the June Brent oil contract rose 22.23% or 5.50 to trade at $30.24 a barrel.

EUR/USD was down 1.10% to 1.0841, while EUR/GBP fell 0.98% to 0.8768.

The US Dollar Index Futures was up 0.61% at 100.360.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Asian stocks slip as global recession looms


SYDNEY/NEW YORK (Reuters) – Asian equity markets and crude oil looked set for further losses on Thursday, after a dire warning about the U.S. coronavirus death toll and mounting evidence the fast-spreading disease has sent the world economy hurtling into a deep recession.

FILE PHOTO: Passersby wearing protective face masks following an outbreak of the coronavirus disease (COVID-19) are reflected on a screen displaying stock prices outside a brokerage in Tokyo, Japan, March 17, 2020. REUTERS/Issei Kato

Stocks on Wall Street fell more than 4% as the warning of a potentially massive death toll and growing evidence of a deep economic downturn reinforced expectations that corporate results will suffer in the first quarter and then turn sharply lower.

U.S. President Donald Trump said he is considering a plan to halt flights to coronavirus hot zones in the United States as his administration struggles to contain a pandemic that is projected to kill at least 100,000 people.

Flight cancellations to U.S. destinations would hammer an already reeling airline industry and add to an overall slowdown in business that will curb corporate earnings.

Nikkei futures NKc1 rose slightly, but sat about below the index’s cash close. Hong Kong futures HSIc1 were negative.

E-Mini futures for the S&P 500 ESc1 rose 0.67%.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.64% in early trade.

Bank stocks led losses in Australia after New Zealand’s central bank ordered lenders suspend dividends – hitting Australia’s banks since they control nearly all New Zealand’s banking sector.

Michael McCarthy, chief strategist at brokerage CMC Markets in Sydney, said bad news worldwide was starting to weigh.

“The shift in rhetoric from the White House has hurt some of the more bullish traders,” he said.

MSCI’s gauge of stock performance in 47 countries .MIWD00000PUS slid 0.08% after declining almost 4% overnight in bourses in London .FTSE, Frankfurt .GDAXI and Paris .FCHI.

“The question of whether the U.S. index goes to test the March lows will be all the talk today,” Chris Weston, head of research at Melbourne brokerage Pepperstone, said in a note.

“Earnings estimates are too high,” he said. “And when we’re hearing of companies curbing buybacks, and shelving dividend plans, then we should expect this to resonate through earnings downgrades too.”

Oil prices fell after U.S. crude inventories rose last week by the most since 2016, while gasoline demand suffered its biggest weekly drop ever as the coronavirus shut down businesses and stay-at-home mandates kept highways bare.

Analysts expect similar data in coming weeks as refineries curb output further and gasoline demand continues to decline. U.S. crude inventories USOILC=ECI rose by 13.8 million barrels last week, the U.S. Energy Information Administration said, in the biggest one-week increase since 2016.

West Texas Intermediate (WTI) crude CLc1 fell 17 cents to settle at $20.31 a barrel, after sliding to a low of $19.90. June Brent crude LCOc1 fell $1.61 to settle at $24.74 a barrel. The global benchmark fell to $21.65 on Monday, its lowest since 2002, when the now-expired May contract was the front month. The dollar gained as investors rushed to safe-havens, such as gold and government debt.

Coordinated action by central banks to boost dollar supply has helped calm extreme volatility, analysts said.

The dollar index =USD rose 0.536%. The Japanese yen JPY= weakened 0.09% versus the greenback at 107.28 per dollar.

Spot gold XAU= rose 0.12% to $1,592.52 an ounce.

U.S. manufacturing activity contracted less than expected in March, data showed, but disruptions caused by COVID-19 pushed new orders received by factories to an 11-year low, reinforcing economists’ views that the economy already was in recession.

Boston Federal Reserve Bank President Eric Rosengren said social distancing efforts meant to contain the coronavirus outbreak have “stilled” the U.S. economy and could lead the unemployment rate to “rise dramatically.”

Traders jumped toward the perceived safety of government bonds on the economic outlook, pushing the yield on the benchmark 10-year U.S. Treasury note down to 0.6019% from 0.699% late on Tuesday.

Graphic: Global currencies vs. dollar here

Reporting by Herbert Lash; additional reporting by Tom Westbrook in Sydney; Editing by Tom Brown and Sonya Hepinstall



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France stocks lower at close of trade; CAC 40 down 4.30% By Investing.com


© Reuters. France stocks lower at close of trade; CAC 40 down 4.30%

Investing.com – France stocks were lower after the close on Wednesday, as losses in the , and sectors led shares lower.

At the close in Paris, the fell 4.30%, while the index lost 4.10%.

The best performers of the session on the were Vivendi SA (PA:), which rose 2.07% or 0.41 points to trade at 19.93 at the close. Meanwhile, Total SA (PA:) fell 0.54% or 0.19 points to end at 35.20 and Pernod Ricard SA (PA:) was down 0.66% or 0.85 points to 128.60 in late trade.

The worst performers of the session were Safran SA (PA:), which fell 16.45% or 13.18 points to trade at 66.96 at the close. Airbus Group SE (PA:) declined 12.03% or 7.14 points to end at 52.20 and Vinci SA (PA:) was down 11.06% or 8.34 points to 67.06.

The top performers on the SBF 120 were Ipsen SA (PA:) which rose 6.72% to 50.35, Biomerieux SA (PA:) which was up 5.65% to settle at 108.40 and Lagardere SCA (PA:) which gained 5.22% to close at 12.10.

The worst performers were Safran SA (PA:) which was down 16.45% to 66.96 in late trade, Natixis (PA:) which lost 13.31% to settle at 2.57 and Coface (PA:) which was down 12.31% to 5.13 at the close.

Falling stocks outnumbered advancing ones on the Paris Stock Exchange by 403 to 180 and 68 ended unchanged.

Shares in Biomerieux SA (PA:) rose to all time highs; gaining 5.65% or 5.80 to 108.40.

The , which measures the implied volatility of CAC 40 options, was up 3.91% to 44.80.

Gold Futures for June delivery was down 0.02% or 0.35 to $1596.25 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in May fell 1.12% or 0.23 to hit $20.25 a barrel, while the June Brent oil contract fell 6.07% or 1.60 to trade at $24.75 a barrel.

EUR/USD was down 0.94% to 1.0925, while EUR/GBP fell 0.74% to 0.8813.

The US Dollar Index Futures was up 0.64% at 99.722.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



U.S. pension funds may pour $400 billion into stocks, lifting virus-hit markets: JP Morgan


NEW YORK (Reuters) – U.S. pension funds that delayed rebalancing their portfolios are likely to pump about $400 billion into stocks over the next two quarters, analysts at JP Morgan said, providing a potential boost to equity markets battered by the coronavirus pandemic.

Weeks of asset price volatility may have pushed some fund managers to postpone rebalancing portfolios where equity allocations have been knocked out of whack by a sharp decline in stocks, the bank said in a note to investors. The S&P 500 fell 20% since the start of the year, marking its worst quarter since 2008.

“We still expect that US pension funds will eventually rebalance within 1-2 quarters,” wrote strategist Nikolaos Panigirtzoglou.

The bank said its estimate of $400 billion in equity buying by the funds over the next two quarters could prove conservative. U.S. pension funds bought $200 billion in stocks by the first quarter of 2009, in the aftermath of the global financial crisis — equivalent to $600 billion today, the bank said.

Wild market swings have presented a challenge to asset managers looking to square their portfolios against a benchmark or return to their long-maintained allocation of stocks versus bonds. While the S&P is down about 24% from its February highs, unprecedented support from the Federal Reserve and a $2.2 trillion relief package from U.S. lawmakers helped stocks rally 15.5% since March 23.

At least one fund — the Los Angeles City Employees’ Retirement System, which oversees some $15 billion — is allowing its rebalancing to be deferred, according to a report in Pensions & Investments. The fund did not immediately respond turn a request for comment.

Brian Reynolds, chief market strategist with Reynolds Strategy, said in a note this week a rebalancing that leads pensions to sell bonds and buy stocks “makes no sense for pensions given the capital calls they are facing from credit and related products.”

Some index providers, such as S&P Dow Jones Indices, have delayed their quarterly rebalancing due to the market volatility, potentially complicating the picture for funds that look to track index performance.

Last week’s rally in stocks may have helped boost some funds’ equity allocations, making the need to increase exposure less acute, said Mike Schumacher, head of macro strategy at Wells Fargo Securities.

The bank last week had estimated that U.S. corporate pensions will need to shift about $40 billion from fixed income into equities to maintain allocation targets. Its estimate now stands at $20 billion following last week’s rally, Schumacher said.

At the same time, mutual funds, pensions and other asset managers rebalancing their portfolio may have stoked some of last week’s gains.

FILE PHOTO: A man wears a protective mask as he walks on Wall Street during the coronavirus outbreak in New York City, New York, U.S., March 13, 2020. REUTERS/Lucas Jackson

Steven DeSanctis, an equity strategist at Jefferies, said moves from fixed income into equities “most likely” happened last week, adding that “the rebalancings don’t have to take place on the 31st.”

Jack Janasiewicz, portfolio strategist at Natixis Investment Managers Solutions, said some of the market’s recent gains have come from quarter-end and month-end rebalancing.

“Once we get through the next couple of days, it’s going to be a little bit more interesting because the question then becomes, ‘Do we return really back to fundamentals and technicals?’.”

Reporting by Lewis Krauskopf; additional reporting by Sinéad Carew and Medha Singh; Editing by Ira Iosebashvili and Tom Brown



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U.S. pension funds may pour $400 billion into stocks, lifting virus-hit markets: JP Morgan By Reuters


© Reuters. A man wears a protective mask as he walks on Wall Street during the coronavirus outbreak in New York

By Lewis Krauskopf

NEW YORK (Reuters) – U.S. pension funds that delayed rebalancing their portfolios are likely to pump about $400 billion into stocks over the next two quarters, analysts at JP Morgan said, providing a potential boost to equity markets battered by the coronavirus pandemic.

Weeks of asset price volatility may have pushed some fund managers to postpone rebalancing portfolios where equity allocations have been knocked out of whack by a sharp decline in stocks, the bank said in a note to investors. The S&P 500 fell 20% since the start of the year, marking its worst quarter since 2008.

“We still expect that US pension funds will eventually rebalance within 1-2 quarters,” wrote strategist Nikolaos Panigirtzoglou.

The bank said its estimate of $400 billion in equity buying by the funds over the next two quarters could prove conservative. U.S. pension funds bought $200 billion in stocks by the first quarter of 2009, in the aftermath of the global financial crisis — equivalent to $600 billion today, the bank said.

Wild market swings have presented a challenge to asset managers looking to square their portfolios against a benchmark or return to their long-maintained allocation of stocks versus bonds. While the S&P is down about 24% from its February highs, unprecedented support from the Federal Reserve and a $2.2 trillion relief package from U.S. lawmakers helped stocks rally 15.5% since March 23.

At least one fund — the Los Angeles City Employees’ Retirement System, which oversees some $15 billion — is allowing its rebalancing to be deferred, according to a report in Pensions & Investments. The fund did not immediately respond turn a request for comment.

Brian Reynolds, chief market strategist with Reynolds Strategy, said in a note this week a rebalancing that leads pensions to sell bonds and buy stocks “makes no sense for pensions given the capital calls they are facing from credit and related products.”

Some index providers, such as S&P Jones Indices, have delayed their quarterly rebalancing due to the market volatility, potentially complicating the picture for funds that look to track index performance.

Last week’s rally in stocks may have helped boost some funds’ equity allocations, making the need to increase exposure less acute, said Mike Schumacher, head of macro strategy at Wells Fargo (NYSE:) Securities.

The bank last week had estimated that U.S. corporate pensions will need to shift about $40 billion from fixed income into equities to maintain allocation targets. Its estimate now stands at $20 billion following last week’s rally, Schumacher said.

At the same time, mutual funds, pensions and other asset managers rebalancing their portfolio may have stoked some of last week’s gains.

Steven DeSanctis, an equity strategist at Jefferies, said moves from fixed income into equities “most likely” happened last week, adding that “the rebalancings don’t have to take place on the 31st.”

Jack Janasiewicz, portfolio strategist at Natixis Investment Managers Solutions, said some of the market’s recent gains have come from quarter-end and month-end rebalancing.

“Once we get through the next couple of days, it’s going to be a little bit more interesting because the question then becomes, ‘Do we return really back to fundamentals and technicals?’.”



Stocks under pressure after biggest quarterly drop since 2008 By Reuters


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© Reuters. Pedestrian wearing a face mask walks on an overpass with an electronic board showing stock information in Shanghai

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By Herbert Lash

NEW YORK (Reuters) – Asian shares faced another leg lower on Wednesday as the coronavirus sharply slows global growth, leading a gauge of world stocks to post its biggest quarterly decline in more than a decade and oil prices to trade near lows last seen in 2002.

Shares on Wall Street tumbled on Tuesday, with the registering its biggest quarterly fall since 1987 and the S&P 500 its steepest quarterly drop since a decade ago on growing evidence of the massive downturn the pandemic will incur.

E-Mini futures for the S&P 500 traded 1% lower in after-hours trade, while Asian futures suggested the rout would continue.

{{28930|FTSE Ch in Singapore were down 0.85% and fell 1.86% in early trade.

The first-quarter decline was the biggest on record for the S&P 500 as consumers hunkered down at home, leading businesses to announce massive staff furloughs and to shut temporarily.

U.S. economic activity is likely to be “very bad” and the unemployment rate could rise above 10% because of efforts to slow the spread of the coronavirus, Cleveland Federal Reserve Bank President Loretta Mester told CNBC. [L1N2BO2UT]

The United States marked 700 deaths in a single day from COVID-19 for the first time on Tuesday, lifting total U.S. fatalities from the disease to more than 3,700. [L1N2BO0S9]

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.35% in early trade.

MSCI’s gauge of stocks across the globe shed 0.48% following modest gains in Europe. The index fell nearly 22% for the quarter.

Bucking the broader decline, Australian shares opened higher as a slowdown in new coronavirus cases brightened investor sentiment while rising iron ore prices gave miners a lift.

Australia’s S&P/ASX 200 index rose 1.59% after the benchmark fell 2% on Tuesday.

The number of coronavirus infections globally headed toward 800,000. Deutsche Bank (DE:) analysts noted, however, that for two consecutive days the global growth in new cases was below 10%, having exceeded that rate for most of the past two weeks.

Health officials were much more cautious. A World Health Organization official warned that even in the Asia-Pacific region, the epidemic was “far from over.”

The dollar slid against a basket of currencies, pressured by the latest Federal Reserve measures to ensure sufficient liquidity in the global financial system.

The Fed is now allowing foreign central banks to exchange their holdings of U.S. Treasury securities for overnight dollar loans.

The fell 0.275% while the Japanese yen strengthened 0.12% versus the greenback at 107.44 per dollar.

Government bond yields held steady as investors remained cautious about buying riskier assets.

The benchmark 10-year U.S. Treasury note rose 15/32 in price to yield 0.6538%.

Crude oil benchmarks ended a volatile quarter with their biggest losses in history, with both U.S. and Brent futures hammered throughout March due to the pandemic and the eruption of the Saudi-Russia price war.

Global fuel demand has been sharply cut by travel restrictions due to the coronavirus. Forecasters at major merchants and banks see demand slumping by 20% to 30% in April, and for weak consumption to linger for months.

Crude futures ended the quarter down nearly 70% after record losses in March.

fell 31 cents to $20.17 a barrel and May futures ended 2 cents lower at $22.74 a barrel ahead of expiration.