US stocks surged in late trading, with the Dow ending up 1935 points or 9.4%, paced by Intel, American Express and JPMorgan Chase – each closed up at least 18%.
The surge came after President Donald Trump declared a national emergency, seemingly reassuring investors that his administration was finally taking the coronavirus outbreak far more seriously.
Among the measures to be taken, Mr Trump said he asked Energy Secretary Dan Brouillette to buy “large quantities of crude oil” for the US strategic reserves.
The initial focus in terms of the coronavirus itself is on increasing the nation’s capacity to test for the virus, Mr Trump said, including rolling out a ‘drive-thru’ option with the help of Walmart and other retailers.
When asked about the lack of testing so far, Mr Trump said: “I don’t take responsibility at all.”
The Dow surged some 1440 points in the final half hour.
The S&P 500 rose 9.3%; the Nasdaq gained 9.4%.
Key to sustaining the market’s renewed optimism could be the outcome of a conference call among the G7 leaders on Monday. And the US central bank policy meeting on March 17-18.
The yield on the US 10-year note leapt 18 basis points to 0.99% as of 4.27pm New York time. It fell to a record low below 0.4% earlier this week.
While Wall Street was at least temporarily in recovery mode, ASX futures were up 61 points or 1.1% to 56558 near 7.15am AEDT. Futures were down more than 100 points earlier.
The Australian dollar was having a particularly tough time; it fell as low as US61.24¢. Near 7.30am AEDT, it was down 0.7% to US61.94¢.
The Bank of Canada, in a move coordinated with a fiscal boost from the Canadian government, slashed its key rate by 50 basis points – that’s the second 50bps cut this month.
“The Bank of Canada is taking concerted action to support the Canadian economy during this period of economic stress,” governor Stephen Poloz said. “The Bank’s Governing Council stands ready to do what is required to support economic growth and keep inflation on target, and we will continue to ensure that the Canadian financial system has sufficient liquidity.”
The Bank of Canada move came hours after central banks in Norway and Sweden detailed measures to bolster liquidity in their respective markets.
A key reason for the rebound in US assets was an expectation that President Donald Trump – after days of dithering – would declare the outbreak of the coronavirus a national emergency, opening the path for $US40 billion in federal funds to flow to states to bolster the response to the spread.
As of Friday 2pm Eastern Time, at least 1872 people in 47 states and Washington, D.C. have tested positive for coronavirus, according to a New York Times database, and at least 41 patients with the virus have died.
Mr Trump reportedly has been resisting such a declaration in part because he has been keen to downplay the impact the virus would have on the US, and potentially on his 2020 presidential re-election campaign.
“When the history of this shocking collapse is written, its defining chapter may focus on Donald Trump’s appalling speech on Wednesday night — poorly delivered, filled with errors, insulting to European allies, and a disaster for the financial markets.”
After earlier forecasting a Trump election win in November, Mr Valliere said Democrat Joe Biden is now the clear favourite. “If Biden can get through Sunday night’s debate [with Bernie Sanders] relatively unscathed, a consensus will grow that he’s the general election front-runner.
“Trump’s hard-core supporters will resist that narrative, but many of them still believe the virus is a media hoax; Trump can’t win in November with only one-third of the electorate.”
Seperate to what Mr Trump may say today, investors are positioning for an at least 50 basis point interest rate cut by the Federal Reserve when its policymakers meet next week. Some are betting the Fed will cut 100bps.
ASX futures up 61 points or 1.1% to 5655 at 7am AEDT
- AUD -0.7% to 61.94 US cents
- On Wall St: Dow +9.4% S&P 500 +9.3% Nasdaq +9.4%
- In New York: BHP +10.9% Rio +13% Atlassian +2.3%
- Apple +12% Microsoft +14.2% Amazon +6.5% Facebook +10.2%
- In Europe: Stoxx 50 +1.6% FTSE +2.5% CAC +1.8% DAX +0.8%
- Iron ore +1.1% to $US91.71 a tonne
- Dalian iron ore +2.9% to 676.5 yuan
- LME aluminium + 1.4% to $US1680 a tonne
- LME copper +0.4% to $US5460 per tonne
- 2-year yield: US 0.50% Australia 0.54%
- 5-year yield: US 0.73% Australia 0.57%
- 10-year yield: US 0.99% Australia 0.95% Germany -0.55%