Global equities brush off oil price chaos

Stocks jump to their highest in almost six weeks

LONDON: World stocks jetted to their highest in almost six weeks on Tuesday as plans to ease coronavirus lockdowns in a number of major economies helped offset more chaos in oil markets and warning of mounting bad credit at HSBC and Santander.

Oil major BP had said it had suffered a near 80% plunge in profits too but with Wall Street futures over 1% higher it was the relatively good news, rather than the bad or plain ugly that investors seemed focused on.

Plans to ease major economies out of coronavirus lockdowns were continuing, reassuring UBS earnings lifted European banks nearly 6% while Italy’s bonds recovered further after it had dodged a damaging credit rating downgrade on Friday.

“The general mood seems to be definitely more positive,” said CMC markets senior analyst Michael Hewson, highlighting that investors now viewed the peaks of coronavirus infections in Asia, Europe and North America as behind them.

“They are banking on a v-shaped recovery (in the global economy)...so the line of least resistance is for stock markets to go higher especially when central banks have got their pedals hard to the floor.”

The near 2% jump in European stocks and the rise from Wall Street later meant MSCI’s 49-country index of world stocks was extending the more than 25% rebound it has made since hitting near four-year lows last month.

Oil remained total carnage though. US West Texas Intermediate (WTI), which went negative last week, was down 10% having dived as much as 20% earlier after a scramble by the United States Oil Fund (USO), to shift its holdings had underscored the dwindling capacity to store excess supply.  

Published in The Express Tribune, April 29^th, 2020.

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