(Bloomberg) -- U.S. stocks swung wildly as investors assessed whether an emergency Federal Reserve rate cut will do enough to effectively combat the economic impact of the spreading coronavirus. Treasuries surged with crude and gold.
The S&P 500 was little changed after spiking as much as 1.50% following the central bank’s 50 basis-point cut of its benchmark rate. The two-year Treasury yield tumbled to 0.78%, while the 10-year plunged below 1.08%. Banks led losses on equity benchmarks, while industrial firms rallied with rate proxies such as REITs and utilities.
The cut came after Group of Seven finance ministers and central bankers spoke this morning to discuss policy responses to the virus. Fed Chair Jerome Powell will hold a press conference at 11 a.m. New York time.
“Does a 50 basis point cut change things? That’s a tough one to answer,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. “It could perhaps help the credit markets, especially primary markets that are currently somewhat frozen. But Fed cuts tend to be less effective in situations like this when there is a supply and demand shock.”
Investors had piled out of risk assets last week as the spreading virus threatened to derail global growth, only to pour back in Monday in anticipation of concerted action from Group of Seven officials. Oil continued its rebound Tuesday, approaching $48 a barrel, while gold also rose. The yen was higher versus the dollar.
The OECD warned that growth will sink to levels not seen in more than a decade and ever more businesses are warning about the impact of the illness. President Donald Trump said on Tuesday the Federal Reserve “should ease and cut rate big.”
The governor of the Bank of England, Mark Carney, said it would take all necessary steps to help the economy. Australia lowered its benchmark by a quarter percentage point. Its currency rose, however, underscoring how traders’ expectations have rapidly shifted in recent days.
These are the main moves in markets:
Stocks
The S&P 500 Index rose 0.4% as of 10:24 a.m. New York time.The Down Jones Industrial Average rose 0.8%.The Stoxx Europe 600 Index surged 2.9%.The U.K.‘s FTSE 100 Index surged 2.2%.The MSCI Asia Pacific Index gained 0.3%.
Currencies
The Bloomberg Dollar Spot Index fell 0.4%.The euro rose 0.3% to $1.1173.The British pound gained 0.6% to $1.2825.The Japanese yen strengthened 0.7% to 107.58 per dollar.
Bonds
The yield on 10-year Treasuries decreased four basis points to 1.12%.The two-year rate lost 11 basis points to 0.79%.Germany’s 10-year yield gained two basis points to -0.60%.
Commodities
Gold futures added 2.1% to $1,623.50 an ounce.West Texas Intermediate crude gained 1.7% to $47.50 a barrel.
--With assistance from Sophie Caronello.
To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Katherine Greifeld in New York at kgreifeld@bloomberg.net
To contact the editors responsible for this story: Sam Potter at spotter33@bloomberg.net, Jeremy Herron
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https://finance.yahoo.com/news/asia-stocks-gain-policy-support-214746726.html
2020-03-03 15:24:00Z
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