Stock markets around the world bounced back Tuesday from record-setting declines after U.S. President Donald Trump said he would ask Congress for a tax cut and other measures to ease the pain of the spreading coronavirus outbreak.
In Toronto, the benchmark S&P/TSX composite index was up 526 points, or 3.6 per cent, to 15,040 at 9:34 a.m. ET, just minutes after markets opened in North America.
Major indices on Wall Street staged similar rebounds, with the S&P 500 opening higher by 66.92 points, or 2.44 per cent, at 2,813.48. The Dow Jones Industrial Average rose 601.98 points, or 2.52 per cent, at the open to 24,453.00.
Oil prices also recovered some of their losses in Monday’s record-setting plunge.
Brent roared back as much as 10 per cent on hopes a supply cut deal could be rescued while most benchmark government bond yields were off record lows as hopes for stimulus in the face of the epidemic boosted risk sentiment.
The oil and gas and mining sectors were leading the charge for Europe as oil recovered some of Monday’s 25 per cent fall following what had appeared to be the complete breakdown of a crucial global oil pact between OPEC and Russia.
Yields on benchmark U.S. 10-year Treasury debt more than doubled to 0.70 per cent and those on German Bunds jumped around 20 basis points at one point as investors pared some safe-haven holdings, though they were beginning to ease again.
The yield, or the difference between the market price and what investors will receive if they hold the bond to maturity, is seen as a measure of economic confidence. Investors shift money into bonds if they expect economic growth and stock prices to weaken. That pushes up the bond’s market price and narrows the yield.
Around the world, London opened 1.8 per cent higher and Frankfurt advanced 1 per cent. China’s main stock index rose 1.8 per cent and Tokyo closed up 0.9 per cent.
Monday’s global selloff reflected alarm over economic damage from the coronavirus that emerged in China in December. Anti-disease controls that shut down Chinese factories are spreading as the United States and European countries close schools, cancel public events and impose travel controls.
Anxiety mounted after Italy, the hardest-hit place in Europe, said travel controls imposed earlier on its north would be extended nationwide. Ireland canceled St. Patrick’s Day parades and Israel ordered visitors quarantined ahead of Passover and Easter, one of the busiest travel periods of the year.
The mounting losses and a flight by investors into the safe haven of bonds have fueled warnings the global economy, which already was showing signs of cooling, might be headed into a recession.