Wall Street’s major stock indexes all rallied at the start of a new trading week on Monday, as investors took heart from a deceleration in coronavirus-related deaths and new cases in Europe, and a drop in virus-deaths in United States hot spot New York state.
The Dow Jones Industrial Average opened up 892.02 points or 4.24 percent at 21,944.55. The S&P 500 index- a gauge for the performance of US retirement and college savings plans – opened up 3.90 percent while the Nasdaq Composite Index opened the session up 3.75 percent.
New York state reported on Sunday that for the first time in a week virus-related deaths had fallen slightly. The news helped lift investor spirits, despite US President Donald Trump over the weekend warning the American people that the next two weeks will be very difficult.
The death toll from the coronavirus is expected to peak in the coming days, US officials also said.
“Domestic demand has plummeted in the wake of the virus mitigation strategy imposed on the economy, and the economic restart is likely to be more gradual than a lot of the growth bulls would like to believe,” said Steven R Ricchiuto, Managing Director and Chief US Economist at Mizuho Securities.
On a global level, investors were encouraged as the death toll from the virus slowed across major European nations, including France and Italy.
London’s FTSE raced up 2 percent, indexes in Paris and Milan rose 3 percent, and Germany’s DAX gained more than 4 percent after Japan’s Nikkei finished with similar gains overnight.
There was plenty of news to demonstrate the carnage coronavirus has unleashed on the global economy, including eye-popping plunges in car sales and air travel in Europe, and Japan preparing to declare a state of emergency.
Worryingly, the number of new coronavirus cases jumped in China on Sunday, while the number of asymptomatic cases surged, too, as Beijing continued to struggle to extinguish the outbreak despite drastic containment efforts.
“The fact that China is struggling to restore production despite coming out of this first is another important lesson to be learned. With many of our trading partners in the same situation or worse, there will be no global lift that can be counted on to accelerate the process of recovery,” Ricchiuto added.
Stay-home, lockdown and quarantine measures have also destroyed global demand for oil in recent weeks.
Oil prices came under pressure after reports that Russia and Saudi Arabia pushed back a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies until Thursday. But losses were pared after one of Russia’s top oil negotiators told business news network CNBC that Riyadh and Moscow are close to a deal.
“I think the whole market understands that this deal is important and it will bring lots of stability, so much important stability to the market, and we are very close,” Kirill Dmitriev, one of Moscow’s top oil mediators who also heads Russian’s sovereign wealth fund, told CNBC.
The S&P 500 energy sector was up more than 2.5 percent in early trading in New York.
OPEC is working on a deal to cut oil production by about 10 percent of world supply, or 10 million barrels per day (bpd), in what member states expect to be an unprecedented global effort.
But a growing number of analysts and experts are beginning to think it is too little too late.
Rystad Energy’s head of oil markets Bjornar Tonhaugen said even if the group agreed to cut up to 15 million bpd, “it will only be enough to scratch the surface of the more than 23 million bpd supply overhang predicted for April 2020”.