Stocks surge with US equity futures; oil deepens decline

Bloomberg

Stocks rose on Wednesday with US equity futures as investors monitored continued volatility in energy markets and earnings reports that haven’t been uniformly negative. Oil prices renewed their slide.
The Stoxx Europe 600 Index opened higher, with gains in tech and telecom shares countering declines in energy companies. Stocks slipped in Japan but climbed in most other major Asia markets. S&P 500 Index contracts advanced after the gauge closed down more than 3%, when investors seemed to shrug off a deal reached by the White House and Congress on a fresh relief package to counter the economic hit from the coronavirus.
Brent crude oil prices tumbled as that benchmark was sucked further into the rout that sent West Texas futures below zero this week. Ten-year Treasury yields fluctuated at levels below 0.6%.
The oil debacle may signal the hit to the global economy from the pandemic will be deeper or longer than anticipated by investors who drove the S&P 500 up 28% from its March lows. Even so, some countries are moving to relax the lockdown measures being used to contain the outbreak.
Meanwhile, corporate earnings have been mixed: Chipotle Mexican Grill Inc. withdrew its guidance, while Netflix said it added nearly twice as many subscribers as predicted in the first quarter. Roche Holding AG said it still expects a small profit gain this year as demand for its best-selling medicines holds up and the drugmaker works on developing tests for Covid-19.
“There’s no way you can predict earnings right now,” Michael Cuggino, portfolio manager at Pacific Heights Asset Management LLC, said on Bloomberg TV. “It’s virtually impossible until we have more visibility with respect to how to world comes out of the coronavirus on the other side.”
The Senate passed a $484 billion pandemic relief package and the House could take it up as soon as Thursday. President Donald Trump said his administration is working on a plan to make money available to the oil industry to prevent the loss of jobs after prices plunged.
Elsewhere, the Australian dollar rose as better-than-expected retail sales data triggered the unwinding of some short positions.
The Stoxx Europe 600 Index increased 0.8% as of 8:17 am London time and futures on the S&P 500 Index climbed 0.7%. Nasdaq 100 Index futures gained 0.8% and the MSCI Asia Pacific Index rose 0.2%.
While the Bloomberg Dollar Spot Index decreased 0.1%, the euro climbed 0.1% to $1.0865 and the British pound increased 0.2% to $1.2315. The Japanese yen strengthened 0.2% to 107.56 per dollar.
The yield on two-year Treasuries declined one basis point to 0.20% and the yield on 10-year Treasuries fell one basis point to 0.56%. The spread of Italy’s 10-year bonds over Germany’s declined two basis points to 2.608 percentage points. Japan’s 10-year yield declined two basis points to 0.002%.
While West Texas Intermediate crude declined 5.7% to $10.91 a barrel, Brent crude declined 12.2% to $16.98 a barrel and gold strengthened 0.2% to $1,689.13 an ounce. Copper fell 0.1% to $2.26 a pound.