Stocks cheer 'light at end of tunnel' in virus crisis
NEW YORK, USA – Equities rallied on Tuesday, May 5, as investors cheered a further easing of lockdowns in some countries, which offset gloomy near-term conditions in the wake of coronavirus shutdowns.
Oil also rose on the brighter economic outlook and possibility of rising demand, posting another gain after an unprecedented plunge into negative territory last month.
With signs that the spread of the coronavirus is easing, governments in Europe and parts of Asia-Pacific as well as some US states have begun to allow businesses to reopen.
"Markets have reacted to the fact that it seems that there is a little light at the end of the tunnel," Scope Markets analyst James Hughes told Agence France-Presse. "Lockdown easing in the likes of Spain and Italy has led to many looking at timelines for many aspects of life reopening."
But Fawad Razaqzada, market analyst with ThinkMarkets, cautioned that while a gradual return to economic activity would bring optimism, the long-term view was still grim.
"Incoming macro data continue to reveal that the damage from COVID-19 is worse than expected, reducing the likelihood we will see a V-shaped economic recovery when the lockdown measures are mostly lifted," Razaqzada said.
This US jobs report for April, due out Friday, May 8, is expected to show unemployment spiking to 16.2% from 4.4%, according to the consensus forecast, but some economists expect it to rise even higher. Job losses are projected to be 21.3 million – a stunning figure in such a short time.
Still, markets continue to take an optimistic view with Frankfurt closing up 2.5% and London ending not far behind. Wall Street stocks also advanced, with the Dow gaining 0.6% and Nasdaq 1.1%.
'On the right path'
"Even if the full return to normal life is not yet on the cards, the recent moves at least give many the sense that we are on the right path," Hughes said.
Hong Kong closed higher on news that some restrictions would be lifted in the city, outweighing data showing its economy suffered its worst contraction on record in the 1st quarter.
Dealers were keeping tabs on China-US relations after US President Donald Trump hit out at Beijing over its handling of the outbreak, saying it began in a Wuhan lab, but so far offering no evidence.
The comments, and his threat that he could hit China with fresh tariffs, have fanned fears of a repeat of the standoff between the economic superpowers that battered markets last year.
In currency markets, the euro slipped against the dollar after Germany's top court cast doubt on the legality of the European Central Bank's massive bond buying program. – Rappler.com