Global Stocks Rise as Investors Bet on Economic Resilience

By Caitlin Ostroff 

Stocks rose Tuesday on speculation that global economic growth will prove to be resilient as fiscal and monetary policies blunt the impact of the coronavirus outbreak on China's economy.

Futures linked to the S&P 500 index gained 1%. The pan-continental Stoxx Europe 600 also rose over 1%, with the U.K.'s FTSE 100 climbing 1.4%. The Shanghai Composite Index ended the day up 1.3%, following a steep selloff Monday.

Fresh data in recent days showing that global manufacturing appeared to be steadying, along with the Chinese central bank's moves to inject liquidity into its banking system this week, have allayed some of the most pressing concerns about global growth, investors said. In the U.S., a widely followed gauge Monday showed that the manufacturing sector had returned to growth in January for the first time since July.

Meanwhile, the People's Bank of China offered funds in the overnight market for a second consecutive day as it seeks to encourage lending to businesses that are struggling. The Chinese government has barred travel and asked companies to halt operations as it tries to stop the spread of the deadly virus that has killed more than 400 people and infected more than 20,000.

"There has been some investor psychology being built up over the last 10 years that the central banks will do whatever they need to," said Peter Garnry, head of equity strategy at Saxo Bank. "That is what the equity market is at least betting on. Whether that comes through, we'll have to see."

Yields on government bonds rose as investors left haven assets in search of better returns. The yield on the 10-year U.S. Treasury climbed to 1.565%, from 1.520% Monday. The yield on similar German bunds climbed to minus 0.448%, from minus 0.464%.

Among European equities, oil giant BP rose 4.6% in London trading after a measure of profit for the fourth quarter beat analysts' expectations.

Crude prices rebounded, with Brent crude, the global benchmark, rising over 1% just a day after skidding into a bear market as it fell more than 20% from September levels.

Later in the day, companies including Ford Motor, Chipotle Mexican Grill and Walt Disney will report earnings. Investors will also be tuning into Gilead Sciences's briefing to glean the potential progress on an experimental treatment it has developed to treat coronavirus.

Write to Caitlin Ostroff at [e-mail]

(END) Dow Jones Newswires

February 04, 2020 05:38 ET (10:38 GMT)

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