By Lorcan Roche Kelly
Stocks around the world are rising the day after the deepest rout since the great financial crisis. Overnight Japan’s Topix index closed higher as the government there looked set to announce new fiscal stimulus measures. In Europe the Stoxx 600 Index, which fell into a bear market yesterday, was more than 3.5% higher by 5:40 a.m. Eastern Time. S&P 500 futures are rallying on hopes of a stimulus program from Washington, Treasury yields reversed nearly half of Monday’s plunge and gold dropped.
The recovery in stocks from the worst of the selloff is largely based on the promise of new measures to protect the economy from the worst of the coronavirus fallout. Lawmakers in Washington are moving to craft legislation that could include tax cuts and expanded unemployment benefits. President Donald Trump said that he plans to announce “very dramatic” actions to support growth in a press conference later today, after he meets with members of Congress.
In an almost unprecedented peace-time move, Italy’s government has basically put the whole country into lockdown as it attempts to gain control over the largest outbreak outside China. The government has promised financial support for industries hit and to ease the credit burden on citizens. Beyond Italy, the spread of the virus continues with cases reported in Europe at the ECB, Deutsche Bank AG, KKR & Co. and BBVA. China reported only 19 new infections, the lowest level since Jan. 18 as the outbreak seems to be under control there.
Saudi Arabia is pulling no punches in its price war with Russia, with Aramco promising to supply 12.3 million barrels of oil a day next month — a massive boost from February’s 9.7 million barrels per day total. The size of the proposed output is higher than Aramco’s sustained maximum production. That implies the kingdom is going to add barrels from inventories in order to dump as much crude as possible as fast as possible into the market. While Russian Energy Minister Alexander Novak said Moscow could add another 500,000 barrels a day to production, he also said that the door isn’t closed to OPEC+ cooperation, comments which are helping sustain some of oil’s recovery from Monday’s rout.
Democratic presidential nominee candidate Joe Biden could take a step closer to victory in that contest today when six states hold votes, with the former vice president holding double-digit leads over Bernie Sanders in key polls. The key event for markets will be the Trump stimulus press conference later today. The USDA publishes its WASDE report for March at 12:00 p.m.