International Markets Regained Ground After The Worst Day In 12 Years

International markets regained ground after Monday’s bruising selloff, with American stock futures gaining 2.6%, as investors welcomed the prospect of new U.S. tax cuts and other measures to counter the economic pain caused by the coronavirus.

President Trump said Monday his administration would discuss several proposals with Congress, including a possible payroll-tax cut and help for hourly wage earners.

The Stoxx Europe 600 index rose 1.2%, following its biggest one-day decline since October 2008. Futures tied to the S&P 500 jumped 2.6%, suggesting U.S. stocks could claw back some of their losses when trading begins later in the day.

Major U.S. stock indexes suffered their steepest single-day falls since 2008 on Monday, tumbling more than 7%, after oil prices slid the most since the Gulf War in January 1991. Indexes in Germany, France and Britain slid into bear markets, as did some sectors of the U.S. market.

In another sign of improving investor confidence Tuesday, the yield on the benchmark 10-year Treasury rose to 0.651%, suggesting demand for the safest assets had abated somewhat. The yield hit a historic low of 0.339% on Monday as investors rushed for cover, before settling at 0.501%. Yields rise as bond prices fall.

“What we see today on global markets is led by U.S. stock futures,” said Frank Benzimra, head of Asia equity strategy at Société Générale in Hong Kong. “Markets are welcoming some policy shifts that seem [likely] to be taken by the U.S. government, including payroll tax cuts, or targeted measures easing cash-flow issues for some companies.”

However, Mr. Benzimra said markets would remain volatile and the collapse in oil prices, plus the stock-market selloff, would hurt the real economy.

In the Asia-Pacific region, Australia’s benchmark S&P/ASX 200 index rebounded to close up 3.1%, after an initial fall that would have left it in bear-market territory had it held through the day.

Japan’s benchmark Nikkei 225 pared steep early losses to add 0.9%. The yen, which had soared against the dollar on Monday in another sign of investor anxiety, weakened 1.4%, with $1 buying about ¥103.80.

Brent crude, the global oil benchmark, recouped some of the previous session’s losses, rising about 4.8% to $35.95 a barrel.

In China, President Xi Jinpingarrived in Wuhan for a surprise visit. This was his first trip to the epicenter of the coronavirus epidemic since the health crisis began, and comes as China reports a steep decline in the number of new cases.

“President Xi’s trip to Wuhan is declaring China has largely brought the coronavirus under control,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities. Mr. Pang said that in turn had helped shore up investor confidence in China’s economic outlook.

In mainland China, the benchmark Shanghai Composite Index closed 1.8% higher. The Hang Seng Index in Hong Kong added 2%.

“It is quite normal for the market to have a minor revision after the brutal selloff on Monday, but it is far from a rebound,” said Hong Hao, chief strategist at Bocom International Holdings.

Mr. Hong said the Trump administration proposals appeared to reassure investors by suggesting “the government still has measures to contain the damage brought by the coronavirus.”

However, Mr. Hong added, many uncertainties remained, including energy prices, and what the U.S. Federal Reserve will do to follow its emergency interest-rate cut last week.


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