Investors take advantage of good news, but the rally fades

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Shadrach   in Stocks & Shares

09 April 2020, 11:31 GMT


A global financial-market rally faded as US shares gained amid expectations that coronavirus outbreak in some hotspots could be easing.

The Dow Jones and the S&P 500 dropped 0.1 percent, while the Nasdaq fell 0.3 percent, pulling back from previous rises and Monday's 7 percent rise.

Stocks in London had closed more than 2 percent higher in Paris and Frankfurt, though earlier Asian markets also had benefited.

The afternoon slide has led to a decline in oil prices.

However, Tuesday's declines were modest compared to the dramatic swings in recent weeks, reflecting signs of renewed investor optimism for several companies - including travel companies and retailers, which had seen shares plunge as governments impose lockdown measures.

In the US, emporium Kohl's jumped 20%, while Royal Caribbean Cruises climbed quite 13%. In the UK, Easyjet rose quite 15%, while British Airways' owner IAG increased 7%.

The FTSE 250, considered to be more representative of the united kingdom economy, finished quite 5% higher.

Investor sentiment was buoyed by news that the price in Spain, which has been badly suffering from the coronavirus pandemic, had fallen for a fourth consecutive day, during a sign that the country may have passed its peak.

There was also a slowdown of latest infections in Italy, which has also been ravaged by the virus. News that some countries, including Austria and Denmark, have made small steps to relax their lockdowns, also helped sentiment.

But ny , which had earlier seen signs its outbreak could be easing, reported an outsized jump in Covid-19 deaths.

Investors are reacting to indications that lockdown measures within the UK, US and Europe are starting to 'flatten the curve' of coronavirus infections and fatalities," said Russ Mould, investment director at AJ Bell.

However, he added:

The market's relief is merely likely to last goodbye , and a spotlight will soon address how countries shall exit the present containment measures which have in effect hit the pause button on the worldwide economy.

Stimulus

Despite gains on Monday and Tuesday, the FTSE 100 remains down by 25% compared to its highest level in January, before the pandemic led to lockdowns across Europe and therefore the US.

Adding to the positive financial news were further measures to support economies, including a trillion-dollar package in Japan and financial institution moves in China.

And with the ink barely dry on a $2 trillion rescue plan gone by Congress last month, Donald Trump said he favoured another massive spending programme, this point targeting infrastructure projects.

There also are reports that European Union leaders are on the brink of a rescue package for countries worst hit by the pandemic.