Stocks rise after Biden win and coronavirus rate cut - Yahoo Finance

Democratic presidential candidate Joe Biden speaks during a primary election night rally. (Marcio Jose Sanchez/AP)

European stocks climbed on Wednesday as investors continued to assess the impact of Tuesday’s emergency rate cut from the Federal Reserve and former US vice-president Joe Biden’s victories in the Democratic primary.

After a volatile trading session, US stocks closed deep in the red on Tuesday, as markets became anxious about the meaning of the Fed’s unexpected decision — the largest since the financial crisis — in the context of the continued coronavirus outbreak.

“There is some serious trouble brewing, and traders are not aware of what is to come. This is the message that investors took away from the Federal Reserve’s surprise action yesterday,” said Naeem Aslam, the chief market analyst at Avatrade.

There have now been more than 93,000 cases of coronavirus globally, with the numbers growing rapidly in Europe.

The pan-European STOXX 600 index (^STOXX) was up by around 1% on Wednesday morning.

The FTSE 100 (^FTSE) climbed by 1.3% in London. Germany’s DAX (^GDAXI) was up by 0.8%, while France’s CAC 40 (^FCHI) was up by around 1%.

Futures are pointing to a higher open for US stocks, which are likely to be buoyed by Biden’s slew of victories.

“Joe Biden’s Super Tuesday wins left him in a much stronger position. Bernie Sanders took the big prize of California, but the resurgence for the moderate Biden helped lift market sentiment, sending futures higher,” said Neil Wilson, the chief markets analyst at Markets.com.

S&P 500 futures (ES=F), Dow Jones Industrial Average futures (YM=F) and Nasdaq futures (NQ=F) are all up by around 2%.

The boost to European equities and US futures followed a mixed trading session in Asia.

Two closely watched purchasing managers' indices from Hong Kong and China fell to all-time lows in February, a sign that the country has plunged into deep recession.

China’s SSE Composite Index (^SSEC) climbed by 0.6%, while the Hang Seng (^HSI) was down by around 0.2% in Hong Kong at market close.

Japan’s Nikkei (^N225) closed flat, while the KOSPI Composite Index (^KOSPI) in South Korea, where there have been more than 5,300 cases of coronavirus, closed around 2.2% in the green.

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2020-03-04 09:00:00Z
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10-year Treasury yield below 1% as investors monitor coronavirus and Super Tuesday - CNBC

U.S. government debt prices rose again on Wednesday morning, though yields remained slightly above the previous session's record lows.

At around 5:25 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at 0.9474%, having fallen to an all-time low of 0.906% on Tuesday. The yield on the 30-year Treasury bond was also lower at 1.5821%.

The U.S. Federal Reserve slashed interest rates by half a percentage point on Tuesday in an emergency measure to combat the expected economic fallout from the coronavirus outbreak, sparking a turbulent session which saw the 10-year yield dip below 1% for the first time in history.

Other major central banks have scheduled meetings in the coming weeks and could follow the Fed's lead, including the European Central Bank, the Bank of England and the Bank of Japan.

According to the latest figures from the World Health Organization, at least 91,700 global cases have been confirmed with at least 3,100 deaths.

Investors will also have an eye on results coming out of Super Tuesday as former Vice President Joe Biden notched a flurry of victories in key Democratic primary states, offering some upward momentum to stock futures.

Final Markit PMI (purchasing managers' index) readings for February are due at 9:45 a.m. ET before a host of ISM non-manufacturing data at 10 a.m.

There are no Treasury auctions scheduled for Wednesday.

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2020-03-04 07:01:00Z
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Dow Jones Futures: As Fed Rate Cut Flops; A Coronavirus Stock Market Correction Survival Guide - Investor's Business Daily

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1. Dow Jones Futures: As Fed Rate Cut Flops; A Coronavirus Stock Market Correction Survival Guide  Investor's Business Daily
2. Dow falls 100 points after G-7 fails to deliver policy action to combat coronavirus  msnNOW
3. Opening Bell: Expectation Of Easing Boosts Stocks; Gold, Bonds Jump As Well  Investing.com
4. Wall Street opens lower as G7 doesn't mention monetary policy action  FXStreet
5. Dow closes nearly 800 points lower despite surprise Fed rate cut  msnNOW
6. View Full Coverage on Google News

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2020-03-04 06:29:00Z
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Central banks have 'far less ammunition' to save the global economy from coronavirus - CNBC

Central banks around the world, including the U.S. Federal Reserve, have lowered interest rates to support their respective economies amid a rapidly spreading coronavirus — and more are expected to follow suit.

But investors and economists said there's not much monetary policy can do to save the global economy, especially when some major central banks — such as the European Central Bank and Bank of Japan — have already cut interest rates into the negative territory.

"The fact is, we're coming into this crisis with far less ammunition globally. It's not just Europe or Japan, even in China they have much less ammunition than the last time they had to launch a stimulus package," Alex Wolf, J.P. Morgan Private Bank's head of investment strategy in Asia, told CNBC's "Squawk Box Asia" on Wednesday.

Wolf's comment came as the new coronavirus — also called COVID-19 — is quickly spreading globally and beyond its epicenter in China. Concerns over the economic hit from the virus resulted in the Fed making an emergency rate cut of 50 basis points on Tuesday.

Lowering interest rates make borrowing costs cheaper and could encourage businesses and households to take loans and spend, which will in turn stimulate the economy.

Before the Fed's surprise cut, central banks in Australia and Malaysia also took rates lower. Analysts expect more to do the same. Major central banks that have scheduled meetings in the coming weeks include the ECB, BOJ and Bank of England.

Brian Martin, senior international economist at Australian bank ANZ, outlined in a Wednesday report the possible moves by those three major central banks:

• The European Central Bank is expected to cut its deposit rate by 10 basis points before its next meeting scheduled on March 12. The ECB's current deposit rate is at a record low of -0.5%
• The Bank of Japan could also cut rates deeper into negative territory
• The Bank of England is expected to cut rates by 25 basis points, possibly before its Mar. 26 meeting

But rates globally have generally stayed low — with some at negative levels — since they were cut after the global financial crisis.

That means some central banks may not have room to take rates much lower, said analysts. For those that still do, any rate cut may not be effective in lifting economic activity, they added.

If this turns into a pandemic that engulfs the United States, it's pretty difficult to envision the U.S. economy getting through without a full-blown economic recession, which means the entire global economy will be in recession.

Mark Zandi

chief economist at Moody's Analytics

Still, the Fed — which some have said is the most important central bank in the world — did "the right thing" by lowering interest rates, said Jurrien Timmer, director of global macro at Fidelity Investments.

The coronavirus outbreak "is a sudden systemic shock to the global economy and probably also to the U.S. economy, certainly as the number of cases start going up," Timmer told CNBC's "Street Signs Asia" on Wednesday.

The Fed's benchmark funds rate is now targeted at a range between 1% and 1.25% after Tuesday's cut, and Timmer said the central bank could cut by another 25 basis points to 50 basis points in the "coming weeks or months."

But as the rate inches closer to zero, investors would be looking for the U.S. government to step in with more measures, said Timmer. Furthermore, monetary policy alone can't solve a global health issue and other economic problems, such as disruptions in manufacturing activity, he added.

A response from the U.S. and other governments to support the economy is especially crucial if the spread of the coronavirus becomes a pandemic, said Mark Zandi, chief economist at Moody's Analytics.

The World Health Organization defines pandemics as "the worldwide spread of a new disease." Moody's Analytics said in a report last week that the odds of the outbreak turning into a pandemic has doubled from 20% to 40%.

"If this turns into a pandemic that engulfs the United States, it's pretty difficult to envision the U.S. economy getting through without a full-blown economic recession, which means the entire global economy will be in recession," Zandi told CNBC's "Squawk Box Asia."

"And if that's the scenario, then that is going to be very hard on all kinds of risk assets: stock prices, credit spreads — everything is going to feel it," he added.

Some governments have already made plans to increase spending to support their economies. Hong Kong announced measures that include a cash handout of 10,000 Hong Kong dollars ($1,287) to all permanent residents aged 18 and above, while Singapore has planned reliefs targeted at businesses most affected by the coronavirus outbreak.  

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2020-03-04 05:30:00Z
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Yield on 10-Year U.S. Treasury Note Falls Below 1%, Setting New Record Low - The Wall Street Journal

By

Sam Goldfarb and

Sam Goldfarb
The Wall Street Journal
• Biography
• sam.goldfarb@wsj.com

Gunjan Banerji

Gunjan Banerji
The Wall Street Journal
• Biography
• @gunjanjs
• gunjan.banerji@wsj.com

Updated March 3, 2020 2:09 pm ET

The yield on the benchmark 10-year U.S. Treasury note fell below 1% for the first time Tuesday, extending a remarkable 2020 decline in the world’s most important interest-rate market.

The decline came as uncertainty over the impact of the coronavirus epidemic on the global economy continued rippling through markets, pushing the Dow industrials to a 700-point decline, on track for their eighth loss in nine trading sessions.

In recent trading, the 10-year yield was 0.993%, according to Tradeweb. The latest declines came after the Federal Reserve moved sooner than expected to cut interest rates, citing the likelihood that the virus outbreak will slow global growth in coming periods.

The 10-year yield was down from 1.085% at Monday’s close, after setting a record intraday low of 1.031% earlier that day. At the start of 2020, the all-time record closing low was 1.365%, set in 2016.

Bond yields started the U.S. trading session sightly above levels from Monday but took a sharp turn downward shortly after the Fed announced it was cutting its key policy rate by half a percentage point—its first between-meeting move since the financial crisis.

The move in yields mirrored the one in stocks, which fell shortly after the Fed’s announcement and extended declines after Fed Chairman Jerome Powell acknowledged the limits of the central bank’s actions in a news conference.

Federal Reserve Chairman Jerome Powell, speaking Tuesday, acknowledged the limits of the central bank’s actions.

Photo: Andrew Harrer/Bloomberg News

Many investors and analysts had expected yields to bounce from their lows at the end of last year as the outlook on the economy brightened. Government bonds and stocks concurrently notched huge gains in 2019 and investors predicted that their lockstep moves would diverge.

Instead, fears about global growth led investors to keep pouring money into Treasurys, causing the 10-year yield to fall to record lows last week.

The rapid slide in Treasury yields caught many off guard, fueling hedging activity and forcing investors that had bet against the government-bond rally to close out their positions, analysts said, giving even greater fuel to the bond rally.

Traders who expected rates to rise “were caught offside,” said Arthur Bass, a managing director at Wedbush Securities. “The move happened a lot quicker and a lot further than they thought.”

Write to Sam Goldfarb at sam.goldfarb@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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2020-03-03 19:09:00Z
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Federal Reserve cuts interest rates amid market fluctuations and coronavirus fears - CBS News

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1. Federal Reserve cuts interest rates amid market fluctuations and coronavirus fears  CBS News
2. Federal Reserve announces first emergency rate cut since the financial crisis  CNN
3. G7 seeks to inoculate global economy against coronavirus  Bangkok Post
4. Can the Fed Save the Economy From Coronavirus?  The New York Times
5. Watch these 4 data points to judge if the Fed should be even more worried about the economy  MarketWatch
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2020-03-03 18:15:05Z
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Federal Reserve makes emergency rate cut to offset coronavirus - Los Angeles Times

The Federal Reserve, reacting swiftly to the coronavirus’ damaging blows to the economy, announced a sizable interest rate cut Tuesday — the first such emergency rate action since the Great Recession more than a decade ago.

The half-point rate cut marks a dramatic reversal from a week ago when Fed officials seemed content to take a wait-and-see approach. But there has been mounting angst in the United States, evident in panicking financial markets, that the spreading virus could do serious harm to the American economy as it has in China, where the outbreak began.

President Trump, an ardent critic of his own Fed chairman, demanded that the central bank keep lowering rates.

“The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors,” he tweeted. “We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”

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The Fed’s announcement came as the United States and six other major advanced economies, known as the G-7, issued a statement pledging to use “all appropriate tools” in response to the rising risks of a possible global pandemic.

Although the G-7 provided no specific action plan, Treasury Secretary Steven T. Mnuchin suggested the White House could soon announce steps to help small and medium-sized businesses affected by the fallout from the spreading coronavirus.

Those steps are likely to include regulatory relief and a special lending facility to help offset potential increases in unemployment and bankruptcies, said Joe Brusuelas, chief economist at RSM US.

“It will soon be time for the federal government to bring out its biggest gun: fiscal firepower,” he said.

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The Fed’s move — along with the coordinated global response reminiscent of the dark days of the 2007-08 financial crisis — gave an immediate boost to stocks, with the Dow swinging almost 700 points into positive territory after the Fed announcement.

But by late morning, the Dow fell back into the red, down 500 points, reflecting the depth of concern about the virus’ potential reach and economic impact, as well as how much lower interest rates or other government actions can help in the face of the mysterious and highly infectious disease.

Fed Chair Jerome H. Powell left open the possibility of additional rate reductions but, in a short, bland statement announcing the action, said policymakers were “closely monitoring developments” of a health crisis that “poses evolving risks to economic activity.”

With the rate cut, the Fed’s main interest rate will be lowered to 1% to 1.25%. Although Powell and his colleagues can trim that down to zero or even into negative territory — which Trump has suggested the Fed do — analysts say lower interest rates themselves are unlikely to be very effective.

For one thing, it’s not a lack of credit or even cash — many corporations are flush — that is the problem. It’s the threat of widespread closings of businesses and consumers staying at home because of travel restrictions or just being afraid to go to malls and public places.

As welcome as the policy actions and pledges are, Moody’s managing director, Atsi Sheth, said “until the virus is contained, we forecast that global economic activity will slow materially.”

Longer term, if the Fed keeps lowering its benchmark rate, that means it will have less room to cut rates later in the event of a recession.

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2020-03-03 16:40:00Z
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