US futures advance with Europe stocks; oil rallies

Bloomberg

US equity-index futures gained along with European stocks on Wednesday and crude oil rallied amid signs the spread of the coronavirus in China is slowing and investor optimism the global economy can weather the storm. Treasury yields edged higher.
Contracts on all three major American gauges pointed to a firm open after China’s Hubei province reported the lowest number of new virus cases this month and suspected infections on the mainland fell. Carmakers and miners led the advance in the Stoxx Europe 600 Index, even as data showed a deep slump in euro-area industrial output at the end of last year. Asia saw gains for most equity benchmarks, with those in Shanghai and Hong Kong outperforming.
Oil climbed back above $50 a barrel in New York and raw materials including copper and iron ore gained, while core European bonds tracked Treasuries lower. Gold and the yen also slipped. New Zealand’s dollar jumped the most in two months after its central bank said the impact from the virus will be short-lived and it doesn’t project a need for rate cuts this year.
Sentiment has improved as confidence among some investors grows that the impact of the coronavirus outbreak will ultimately prove short-lived. President Xi Jinping vowed China would meet its economic goals while winning the battle against the virus that has now claimed 1,115 lives, while Federal Reserve Chairman Jerome Powell said
the central bank is keeping a close eye on fallout from the epidemic.
“An air of relief has permeated global markets following a sustained decline in the rate of new coronavirus cases, diminishing the risk premium,” said Nema Ramkhelawan-Bhana, an economist at Firstrand Bank Ltd in Johannesburg. “The absolute impact on economic growth is yet to be quantified, but markets appear more confident that its effects will be limited to the first quarter. The efforts of Chinese policy makers will prop up growth.”
Meanwhile, peripheral European bonds bucked declines and the yield on 10-year Greek debt dropped below 1% for the first time.
Earnings season continued with reports including MGM Resorts International on Wednesday. Thursday brings Alibaba, Nissan, Credit Suisse, Airbus, Nestle and AIG.
Thursday sees a gauge of underlying US inflation, the core consumer price index. It is forecast to increase to 0.2% in January, a faster pace than in December.
China and the US on Friday lower tariffs on billions of dollars of respective imports as part of the trade deal signed last month.
Futures on the S&P 500 Index increased 0.4%. The Stoxx Europe 600 Index gained 0.4% in New York. The MSCI All-Country World Index rose 0.2%. The UK’s FTSE 100 Index climbed 0.4%.
The Bloomberg Dollar Spot Index was little changed. The euro was unchanged at $1.0916. The British pound gained 0.2%the strongest in a week. The Japanese yen weakened 0.2% to 109.97 per dollar.
The yield on 10-year Treasuries gained one basis point to 1.61%. The yield on two-year Treasuries rose one basis point to 1.43%. Germany’s 10-year yield climbed one basis point to -0.38%. Britain’s 10-year yield gained two basis points to 0.593%.
West Texas Intermediate crude rose 1.6% to $50.75 a barrel. Gold depreciated 0.1% to $1,566.07 an ounce. Copper climbed 0.8% to $2.60 a pound.