Stocks move to higher ground, stress on Italian bonds decreases

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LONDON (Reuters) – Europe pulled global equity markets to a higher level on Thursday as interim measures to reopen parts of some of its largest economies hit by coronaviruses and an oil rebound offset some economic data truly dismal worlds.

FILE PHOTO: The DAX graph of the German stock price index is shown on the Frankfurt Stock Exchange in Germany on April 15, 2020. REUTERS / Staff / File photo

Traders seemed determined to be more resilient in the face of the torrent of gloomy numbers that had been bypassed by the IMF warning on the eve of a global Depression-style collapse and record retail sales plummeting -United.

The pan-European STOXX 600 index pushed back equally bleak British retail figures and more warnings that countries facing double-digit recessions should rise by 1%, while Wall Street futures were up 0.8% ESc1 despite another dizzying jump in unemployment claims in the United States.

In the currency and bond markets, the EUR = and Italian bonds gained momentum as speculation mounted that the European Central Bank was seeking to avoid further tension in the country’s debt markets, where the debt / GDP ratio should now exceed 150%. year.

“We had this big wave of big announcements by governments and central banks and now we need to get to the heart of the matter of how it all works,” said AXA Investment Managers chief economist Gilles Boy.

“We have to see if it works, how it works and if we need to do more,” adding that the speed of the recent rise in Italian bond rates was worrying for the eurozone.

Markets can grasp the fact that politicians, even reluctantly, are beginning to allow strict foreclosure.

Germany offers to reopen schools and some retailers from May 4, while 20 or so US states spared the worst of the coronavirus pandemic may start reopening their economies by the May 1 target date of President Donald Trump.

Companies are also looking to restart. German car manufacturers Volkswagen (VOWG_p.DE) and Mercedes-Benz (DAIGn.DE) will restart production in some German factories next week and in other countries a week later.

But the economic figures are disastrous. After IMF forecasts for this year, markets expect China to announce Friday that first-quarter GDP has contracted for the first time in record form, and hopes for a rapid rebound are fading quickly.

A Reuters survey has shown that most Japanese companies believe the stimulus measures announced so far are insufficient, and US data on Wednesday also shows that manufacturing output fell the most there in 74 years.

The Morgan Stanley investment bank (MS.N) also highlighted the damage as it posted a 32% drop in quarterly profit on Thursday.

OUTSIDE ORGAN OIL STAPLERS

Asia had a more difficult session overnight. The Tokyo Nikkei fell 1.3% and the largest MSCI Asia-Pacific equity index outside Japan .MIAPJ0000PUS lost almost 1%, offsetting gains earlier this week which l ‘had brought to a month high.

The risk-sensitive Australian dollar AUD = D3 fell to its lowest level in a week and commodity prices struggled to rise in response to expectations for crater demand.

But things have turned out in Europe as the mood has improved. Brent LCOc1 and American futures crude CLc1 increased by $ 1 to $ 28.75 and $ 20.22 per barrel respectively, in the hope that the large accumulation of stocks will give producers little choice. than deepening production reductions.

The International Monetary Fund forecasts zero growth in Asia this year for the first time in 60 years, as exporters are beaten by falling demand and anti-virus measures force consumers to stay at home and stores to close.

Norbert Ruecker, economic director of the Swiss bank Julius Baer, ​​said that “oil prices must remain depressed to force closings among non-cartel producers”, as in the United States, where much of the production n is not economical at current prices.

“We remain faithful to our neutral point of view and see prices continue to fluctuate enormously around current levels in the very short term,” he added.

The benchmarks in Australia, Hong Kong .HSI and Shanghai .SSEC also fell between 0.4% and 1.3% and some emerging markets experienced a larger decline.

“A recovery schedule … remains impossible to predict,” said Ronald Lam, customer manager for airline Cathay Pacific (0293.HK), which reduced almost all of its passenger capacity and lost a fifth of its value this year.

Additional reports by Tom Westbrook in Singapore and Shadia Nasralla in London; Editing by Kim Coghill and Giles Elgood

Our standards:Principles of the Thomson Reuters Trust.

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