LONDON: Stock markets rallied on Monday as investors cheered news more countries were easing lockdowns and the Bank of Japan expanded stimulus to cushion the impact of the coronavirus, though the oil price took another tumble with storage running out.
The Bank of Japan matched market speculation by pledging to buy unlimited amounts of government bonds and sharply raising purchases of corporate and commercial debt, the latest in a raft of vast central bank stimulus announcements that have helped propel a near 25% rally in global stock markets.
The Federal Reserve and the European Central Bank (ECB) meet later in the week. Analysts do not expect many new big announcements but the ECB is predicted to increase the size of its bond buying programme.
“It’s central bank week and investor sentiment is on a firm footing,” said Stephen Gallo, European Head of FX Strategy at BMO Capital Markets. “This is purely a case of ‘don’t fight the central banks’,” he added.
The Euro Stoxx 600 rose 1.64%, following on from decent gains on Asian markets. Germany’s Dax rose 2.49%, France’s CAC 40 1.88% and Britain’s FTSE 100 1.45%.
Wall Street also looked set to open higher, with S&P futures 0.95% ahead.
The MSCI world equity index, which tracks shares in 49 countries, rose 0.77%. The index is now up 25% from its low on March 23, but is still more than 20% off the highs in February, before panic over the virus triggered a market rout. After more than a month of lockdowns, countries are gradually moving to ease restrictions, believing the peak of the virus infection rate has passed. More US states are preparing to ease curbs on commerce despite health experts warning that there is still too little testing in place, while European countries further eased their restrictions.
Published in The Express Tribune, April 28th, 2020.
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