Biden’s Super Tuesday victories boost financial markets

Dow Jones and S&P 500 rise more than 4 percent.

U.S. stocks surged afte
After the US Congress agreed to an emergency spending bill to combat the spread of the coronavirus, financial markets rose [FIle: Bloomberg]

Wall Street roared back to life on Wednesday. The Dow and S&P 500 each ended more than 4 percent higher, as former US Vice President Joe Biden’s strong showing in the Super Tuesday primary contests jolted healthcare stocks and upbeat economic data helped soothe worries about the coronavirus impact.

The Dow Jones Industrial Average rose 4.53 percent. The S&P 500 gained 4.22 percent, and the Nasdaq Composite added 3.85 percent.

Former Vice President Biden, considered less likely to raise taxes and impose new regulations than rival Bernie Sanders, rolled to victories across the South, Midwest, and New England on the biggest day of voting in the Democratic nomination campaign.

That helped US stock markets bounce back from declines on Tuesday after investors deemed the US Federal Reserve’s surprise 50-basis-point interest rate cut to be an inadequate response to an epidemic that has so far killed more than 3,000 people worldwide and threatens to slow global growth.

Analysts stressed there was probably more trouble to come as the outbreak continues to worsen in countries outside China.

MSCI’s gauge of stocks across the globe gained 1.95 percent and emerging market stocks rose 0.83 percent.

The epidemic continues to affect companies and financial institutions around the world. Lufthansa said it would ground 150 aircraft out of its total fleet of about 770 due to the virus, and General Electric warned it would take a hit of $300m to $500m.

Money markets in the eurozone are pricing in a 90 percent chance that the ECB will cut its deposit rate, now minus 0.50 percent, by 10 basis points next week.

Economic data shows the US economy was in good shape before the Fed’s cut. US services sector activity jumped to a one-year high in February while the ADP National Employment report showed private payrolls gained 183,000 jobs last month.

Source: Reuters