London, United Kingdom | AFP | US and European stock markets were higher Friday as investors turned buyers again after the previous day’s rout on coronavirus economic fallout fears and the likelihood of a second wave of the pandemic in the United States.
The magnitude of the earthquake caused by the COVID-19 outbreak was brought home by official data showing the British economy shrank 20.4 percent month-on-month in April.
If everybody agreed that April was likely to be a disastrous month, the figures were still awful and suggest any recovery will take longer than many hope.
After sharp losses overnight on Wall Street’s Thursday reverse, Asia fell sharply but then steadied somewhat before Europe reversed early losses to show gains of 1.0 percent in London, 0.6 percent in Frankfurt and 1.5 percent in Paris.
In New York, the DJIA opened with a sharp advance of 2.7 percent, still leaving it with some way to go to erase Thursday’s loss of nearly seven percent.
– ‘Buying on the dip’ –
“As if it was not already clear that we are living through extraordinary times, investors are piling back into stock on Friday after a sharp sell-off a day earlier,” said analyst Craig Erlam at trading group OANDA.
“While yesterday’s 6.9-percent plunge in the Dow is not even in the top three worst days this year, it is still a quite remarkable daily drop historically.
“Today’s rebound may not last… but these markets are very strange and I wouldn’t be surprised if it’s instead being perceived as a ‘buy the dip’ opportunity.”
Europe tumbled Thursday on growing virus concerns, with Frankfurt down 4.5 percent, London losing 4.0 percent and Paris sinking 4.7 percent.
Global equities dived as investors worried about a second US virus wave and after the US Federal Reserve warned of a “highly uncertain” economic outlook because of the pandemic.
Stocks have blasted higher since hitting a deep trough three months ago, supported by trillions of dollars in government and central bank funding and an easing of lockdown measures.
But the optimism on trading floors was shattered Wednesday when Fed boss Jerome Powell signalled the world’s top economy would take some time to bounce back from the crisis.
While his comments, and the bank’s decision to keep interest rates at near zero for at least two years, was as expected, the dose of reality jolted traders.
That coincided with figures showing a spike in new infections in key states including Texas, California, Arizona and Florida, which fanned concerns of a new wave as the nation slowly reopens.
Asian markets fell further, but losses were shallower than earlier in the day and much lighter than on Wall Street on Thursday, where all three main indexes were routed.
– Key figures around 1300 GMT –
London – FTSE 100: UP 1.5 percent at 6,168.92 points
Frankfurt – DAX 30: UP 1.1 percent at 12,095.52
Paris – CAC 40: UP 2.0 percent at 4,909.74
EURO STOXX 50: UP 1.5 percent at 3,192.81
Tokyo – Nikkei 225: DOWN 0.8 percent at 22,305.48 (close)
Hong Kong – Hang Seng: DOWN 0.7 percent at 24,301.38 (close)
Shanghai – Composite: FLAT at 2,919.74 (close)
New York – Dow: UP 2.7 percent at 25,794.26
West Texas Intermediate: UP 1.0 percent at $36.71 per barrel
Brent North Sea crude: UP 1.3 percent at $39.03
Euro/dollar: UP at $1.1303 from $1.1299 at 2100 GMT
Dollar/yen: UP at 107.341yen from 106.87 yen
Pound/dollar: DOWN at $1.2591 from $1.2602
Euro/pound: UP at 89.80 pence from 89.66