Stocks Climb From Lowest Since 2016; Dollar Drops

Asian stocks and U.S. futures climbed on Tuesday after global equities hit their lowest level since 2016, the dollar snapped a 10-day rally and Treasuries dipped as appetite for riskier assets revived.

Contracts on the S&P 500 rose about 4% at one point, more than making up what the index lost on Monday. Benchmarks in Tokyo, Hong Kong and Sydney climbed at least 2%, and Korean shares jumped about 7% as the government announced measures to stabilize financial markets. The dollar retreated against developed and emerging currencies alike, in a tentative sign of reduced stress after the steepest appreciation since the global financial crisis.

Tuesday’s gain in risk assets followed an unprecedented move by the Federal Reserve to serve as a backstop for large swathes of the U.S. financial system, as borrowers face payment challenges amid economic shutdowns. JPMorgan Chase & Co. analysts flagged the potential for a break in “self-reinforcing negative feedback loops,” highlighting a likely inflow into stocks from asset managers rebalancing portfolios.

Still, actions on the fiscal side in major economies remain pending, and the U.S. Congress has failed so far to find a bipartisan compromise. With history replete with evidence of proverbial dead-cat bounces, many are resolved to sit on the sidelines. Meanwhile, South Korea will set up bond and stock support funds in response to the coronavirus outbreak, the president announced after an emergency meeting.

“There’s potentially more downside,” Jingyi Pan, a strategist at IG Asia Pte in Singapore, said on Bloomberg TV. “There’s not too much more downside from here, but in terms of expecting things to go up, it’s still a little bit too early at this point.”

Here are the main moves in the market:

Stocks
S&P 500 futures rose 3.4% as of 2 p.m. in Tokyo. The S&P 500 Index fell 2.9% as of 4 p.m. in New York;
The Dow Jones Industrial Average lost 3%.
Topix index rose 2.2%.
Australia’s S&P/ASX 200 Index rose 3.4%.
South Korea’s Kospi index gained 6.5%.
Hong Kong’s Hang Seng Index rose 3.6%.Shanghai Composite gained 1.5%.
Euro Stoxx 50 futures rose 3.4%.
MSCI Asia Pacific Index jumped 3.7%.

Currencies
The yen rose 0.8% to 110.31 per dollar.
The euro gained 0.6% to $1.0789.
The British pound gained 0.8% to $1.1638.
China’s offshore yuan was at 7.0984 per dollar, up 0.3%.

Bonds
The yield on 10-year Treasuries rose about three basis points to 0.82%.
Australia’s 10-year bond yield fell about two basis points to 0.90%.

Commodities
West Texas Intermediate crude rose 4.1% to $24.31 a barrel.
Gold climbed 1.2% to $1,572.38 an ounce.

— Bloomberg