NEW YORK, Feb 7 ― World equity markets rallied for a fourth day yesterday, with key stock indexes touching fresh peaks, as news that China plans to cut tariffs in half on some US goods buoyed risk sentiment and pushed safe-haven currencies lower.
The yield on Germany's benchmark 10-year Bund touched its highest in almost two weeks as investors bet China's efforts to contain the deadly coronavirus would mitigate its impact on the global economy.
The death toll in mainland China jumped by 73 to 563, with more than 28,000 infections confirmed.
US Treasury Secretary Steven Mnuchin, in an interview with Fox Business Network, downplayed concerns that the outbreak could affect global supply chains, but said “this is something we're monitoring very carefully.”
Major indexes ― including the STOXX Europe 600 of small-, mid- and large-cap stocks, the Nasdaq, benchmark S&P 500 and Dow industrials on Wall Street; and the S&P/TSX composite in Toronto ― set intraday and closing records.
The yen slid to a two-week low against the dollar and the Swiss franc fell to its weakest in more than a week as investors hailed news China would halve tariffs on 1,717 US goods.
Many risk-off moves taken over the past two weeks are being unwound, said Simon Harvey, an FX market analyst at Monex Europe in London.
“We're seeing credible responses from monetary authorities in China and it looks like it's soothing market fears of a more entrenched slowdown in the Chinese economy,” Harvey said.
MSCI's gauge of stocks across the globe gained 0.55 per cent, just half a percentage point shy of a record set three weeks ago, and its emerging markets index rose 1.06 per cent.
The pan-European STOXX 600 index advanced 0.44 per cent, helped by a swath of strong earnings reports. The euro zone banks index posted its biggest daily gain in a month.
Indexes in Frankfurt, Paris and London all gained, rising between 0.3 per cent and 0.9 per cent.
The Dow Jones Industrial Average rose 88.92 points, or 0.3 per cent, to 29,379.77. The S&P 500 gained 11.09 points, or 0.33 per cent, to 3,345.78 and the Nasdaq Composite added 63.47 points, or 0.67 per cent, to 9,572.15.
Rebounding worker productivity in the fourth quarter and other US economic data also lifted sentiment on Wall Street.
The number of Americans filing for unemployment benefits dropped to a nine-month low last week.
The dollar index rose 0.17 per cent, with the euro down 0.15 per cent to US$1.0981 (RM4.5339). The yen weakened 0.14 per cent versus the greenback at 109.99 per dollar.
Gold rose on expectations central banks will keep interest rates low. US gold futures settled up 0.5 per cent at US$1,570 an ounce.
Bond yields in Europe were pressured upward by remarks from European Central Bank President Christine Lagarde that euro zone growth remains modest but there are signs of stabilization.
Germany's Bund yield rose as much as 3 basis points to -0.339 per cent, its highest in almost two weeks, before pulling back to around -0.39 per cent.
US Treasury yields were little changed after earlier trading higher. Benchmark 10-year US Treasury notes rose 2/32 in price to push its yield down to 1.6439 per cent.
Brent crude gave up early gains as the Organization of the Petroleum Exporting Countries and Russia gave mixed signals about possible further output cuts to counter concerns about weak demand due to the coronavirus epidemic.
Brent fell by 35 cents to settle at US$54.93 a barrel while West Texas Intermediate rose 20 cents to settle at US$51.07 a barrel. ― Reuters
