Overseas markets mixed as last week's rally fades, oil prices decline
Associated Press April 20, 2020
World shares were mixed on Monday as last week's rally on Wall Street faded and oil prices retreated. Stocks fell in Paris, Tokyo and Sydney but gained in London and Frankfurt.
A fresh crop of grim economic data is expected this week after a worldwide rally on Friday that pushed the S&P 500 up 2.7%.
Germany's DAX gained 0.3% in early trading to 10,657.10 while Britain's FTSE 100 edged 0.1% higher to 5,793.11. In France, the CAC 40 declined 1.1% to 4,498.16.
The future for the S&P 500 lost 0.9% and the contract for the Dow industrials lost 1%.
Japan reported Monday that its exports fell nearly 12% in March from a year earlier as the pandemic hammered demand in its two biggest markets, the U.S. and China.
Tokyo's Nikkei 225 index gave up 1.2% to 19,669.12.
The Hang Seng index in Hong Kong lost 0.2% to 24,330.02, while the Shanghai Composite index added 0.5% to 2,852.55. The Sensex, in India, added 0.2% to 31,665.69.
The S&P/ASX 200 declined 2.5% to 5,353.00 as Australian resource companies were pulled lower by the weakness in oil prices.
Benchmark U.S. crude for June delivery lost $1.75 to $23.28 per barrel in electronic trading on the New York Mercantile Exchange. It lost 50 cents to $25.03 per barrel on Friday. Brent crude, the international standard for pricing, gave up 96 cents to $27.12 per barrel.
But the future for May delivery sank to its lowest level in two decades, dipping briefly to $14.45 per barrel.
Shares also fell in Taiwan, Singapore and Jakarta but rose in Bangkok.
"Basically, bears are out for blood," Naeem Aslam of Avatrade said in a report. "The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut."
A decline in China's benchmark lending rate, which mostly affects big, state-owned companies, helped support Shanghai's Composite index. The People's Bank of China paved the way for the monetary easing last week by reducing by 0.2% a rate called the medium term lending facility, which forms the basis for the loan prime rate. The cuts reduce short-term borrowing costs for banks.
China's central bank has used various targeted moves to ease the crunch from the pandemic, which resulted in a 6.8% contraction in the economy in the last quarter. "As employment conditions remain weak and external demand is being held back by lockdowns elsewhere in the world, we think the People's Bank will take further steps to prop up activity," economists at Capital Economics said in a commentary.
Friday's rally on Wall Street gained momentum on reports of early progress in a possible treatment for the coronavirus and moves by President Donald Trump to nudge states toward reopening businesses and other activities shut down to help stem the spread of the pandemic, which has killed more than 165,000 people and infected at least 2.4 million worldwide, 760,000 of them in the U.S.
Treasury yields remained extremely low. The yield on the 10-year Treasury slipped to 0.62% from 0.64%. It started the year near 1.90%. Bond yields drop when their prices rise, and investors tend to buy Treasurys when they're worried about the economy.
The most recent gains have been powered by hopes that the pandemic may be leveling off in some of the world's hardest-hit areas.
But the S&P 500 is still down roughly 16% from its record high in February. Some 22 million U.S. workers have lost their jobs in the last month as businesses shut down. Banks are bracing for consumers and businesses to default on billions of dollars in loans, and no one can say for sure when the economy will get back to anything approximating "normal."
The dollar fetched 107.76 Japanese yen, up from 107.54 yen on Friday. The euro weakened to $1.0865 from $1.0875.