Global equity benchmarks edged higher on Thursday as investors weighed an ongoing rebound in oil prices against stark economic data from Europe and the U.S. that further illustrated the worldwide toll from the coronavirus pandemic.
IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI) the European Union, seen as a good gauge of economic health sank to, by far its lowest, reading since the survey began in mid-1998.
In the UK, PMIs fell to a new record low in March – and far below, even the weakest forecast, in a Reuters’ poll of economists.
U.S. jobless claims, meanwhile, fell to 4.427 million, a decline from 5.2 million the week before but still about 200,000 more than expected.
A record 26 million Americans have sought unemployment benefits over the last five weeks.
“While markets are going to take this drop as being very positive, it is not a victory flag that recession is going to be avoided,’’ said Steven Blitz, Chief U.S. Economist at TS Lombard in New York.
MSCI’s gauge of stocks across the globe gained 0.74 per cent, following modest gains in Europe and Asia.
In early trading on Wall Street, the Dow Jones Industrial Average rose 165.87 points, or 0.71 per cent, to 23,641.69, the S&P 500 gained 22.3 points, or 0.80 per cent, to 2,821.61 and the Nasdaq Composite added 66.73 points, or 0.79 per cent, to 8,562.11.
Safe-haven assets like the dollar and government bonds were little changed.
Benchmark 10-year notes last rose 1/32 in price to yield 0.6172 per cent, from 0.619 per cent late on Wednesday.
An internal EU note showed the bloc’s commission was considering a plan worth two trillion euros ($2.2 trillion) to tackle a deep recession.
An EU meeting to discuss the plan comes a day after the U.S. Congress appeared to be on course to approve nearly $500 billion more in coronavirus aid, taking the world’s biggest economy’s overall stimulus packages to nearly $3 trillion.
“The EU Council meeting will be closely watched to see how quickly EU policy-makers will move towards area-wide fiscal risk-sharing,’’ said George Cole, an economist at Goldman Sachs.
“We expect the discussions to fall short of a full commitment to mutualise risks from the COVID-19 shock.’’
The prospects of further stimulus measures and increasing tensions between the U.S. and Iran helped bolster oil prices.
U.S. crude recently rose 21.19 per cent to $16.70 per barrel and Brent was at $22.09, up 8.44 per cent on the day
