U.S. stock futures fell Wednesday as investors’ anxiety about the economic fallout from the coronavirus outbreak left markets poised for another day of tumultuous trading.
Futures tied to the Dow Jones Industrial Average dropped 1.9%, suggesting U.S. blue-chip stocks are likely to open lower. That follows a frenetic day that saw the key equity benchmarks soar in the final hours of trading. A closely watched measure of turbulence in U.S. stocks, the Cboe Volatility Index, inched up to near its highest in a year.
“It’s very hard to have even a fundamental analysis of what’s happening in markets,” said Seema Shah, chief strategist at Principal Global Investors. “Volatility is very high at the moment.”
European stocks climbed, buoyed by an unexpected rate cut by the Bank of England, taking the Stoxx Europe 600 index about 1.2% higher. The easing of monetary policy in the U.K. came with other measures to support the economy, including cheaper borrowing for small businesses.
The move came just over a week after the Federal Reserve cut its key interest rate. The European Central Bank is expected to ease policy Thursday as authorities take steps to shield economic growth from the impact of the epidemic as business activity and travel is curtailed.
“This is almost the best we could have hoped for from policy makers at the moment,” Ms. Shah said. “On its own, an interest rate doesn’t really do much. The most important part is the targeted liquidity measures for small businesses” in the U.K., she said.
The yield on 10-year U.S. Treasurys edged down to 0.724%, from 0.743% on Tuesday. Bond yields, which move inversely to prices, have careened in recent days: the widely watched benchmark tumbled from above 1% on Thursday to a record intraday trough near 0.4% on Monday as investors sold off equities and raced for the shelter of government bonds.
“When we talked about recession fears over the years since the financial crisis, we’ve always been comforted by relatively narrow credit spreads,” Ms. Shah said. “Now we’re seeing those start to widen, and corporate debt levels have risen recently, risks of defaults are that bit higher.”
In the Asia-Pacific region, major markets reflected investors’ continued concerns about global growth prospects. Japan’s Nikkei 225 index declined 2.3% to close at its lowest level since December 2018. Australia’s S&P/ASX 200 dropped 3.6% to enter a bear market, typically defined as a decline of at least 20% from a recent peak.
“It’s too early to call this stabilization, and it’s too early to position for a rebound here,” said Mayank Mishra, a global macro strategist at Standard Chartered Bank in Singapore. “Financial markets will continue to focus on the economic implications from the virus, and right now the global outlook for growth is not rosy.”
While markets had already priced in likely interest-rate cuts and other support from central banks, government action moves at a slower pace, according to Mr. Mishra. “The fiscal response is a slower-moving beast, so let’s see how that helps stabilize global financial markets,” he said.
Traders at the New York Stock Exchange on Tuesday.
Photo: Spencer Platt/Getty ImagesWrite to Anna Isaac at anna.isaac@wsj.com and Frances Yoon at frances.yoon@wsj.com
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https://www.wsj.com/articles/global-markets-calmer-after-two-hectic-days-11583899913
2020-03-11 10:18:52Z
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