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GLOBAL MARKETS-Shares jump as investors cheer lockdown easing, more stimulus

Published 27/04/2020, 09:20 pm
© Reuters.
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* European stocks follow Asian shares higher after BoJ stimulus

* Italy, some U.S. states prepare for relaxing lockdown

* Oil tumbles again as storage runs out

* Italian yields drop after credit rating reprieve

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh (Adds details, quote, chart)

By Tommy Wilkes

LONDON, April 27 (Reuters) - Stock markets rallied on Monday as investors cheered news more countries were easing lockdowns and the Bank of Japan expanded stimulus to cushion the impact of the coronavirus, though the oil price took another tumble with storage running out.

The Bank of Japan matched market speculation by pledging to buy unlimited amounts of government bonds and sharply raising purchases of corporate and commercial debt, the latest in a raft of vast central bank stimulus announcements that have helped propel a near 25% rally in global stock markets.

The Federal Reserve and the European Central Bank meet later in the week. Analysts do not expect many new big announcements but the ECB is predicted to increase the size of its bond buying programme.

"It's central bank week and investor sentiment is on a firm footing," said Stephen Gallo, European Head of FX Strategy at BMO Capital Markets.

"This is purely a case of 'don't fight the central banks'," he added.

The Euro STOXX 600 .STOXX rose 1.64%, following on from decent gains on Asian markets. Germany's DAX .GDAXI rose 2.49%, France's CAC 40 .FCHI 1.88% and Britain's FTSE 100 .FTSE 1.45%.

Wall Street also looked set to open higher, with S&P futures ESc1 0.95% ahead.

The MSCI world equity index .MIWD00000PUS , which tracks shares in 49 countries, rose 0.77%. The index is now up 25% from its low on March 23, but is still more than 20% off the highs in February, before panic over the virus triggered a market rout.

After more than a month of lockdowns, countries are gradually moving to ease restrictions, believing the peak of the virus infection rate has passed.

More U.S. states are preparing to ease curbs on commerce despite health experts warning that there is still too little testing in place, while European countries further eased their restrictions. prime minister announced on Sunday that factories and building sites could reopen from May 4 and family visits would be permitted, as the country prepares a staged end to Europe's longest lockdown. British prime minister, by contrast, said on Monday it was too risky for the country to relax its lockdown. a busy week for corporate earnings around 173 companies in the S&P 500 will report, including Apple AAPL.O , Amazon AMZN.O , Facebook FB.O , Microsoft MSFT.O , Caterpillar (NYSE:CAT) CAT.N , Ford F.N , General Electric (NYSE:GE) GE.N and Chevron (NYSE:CVX) CVX.N .

Analysts expect a 15% decline in S&P 500 first-quarter earnings, with profits for the energy sector estimated to have slumped more than 60%, raising fears of debt defaults.

Many European companies are reporting too, and better-than-expected earnings from Germany's Deutsche Bank (DE:DBKGn) helped lift sentiment on Monday. United States and European Union both release first-quarter economic growth numbers this week, while the influential U.S. ISM manufacturing survey is also due.

But not everyone thinks the current crop of data is as relevant for markets, which have recently shrugged off huge rises in jobless claims to focus on how quickly economies will rebound as government-imposed lockdowns are lifted.

"I don't know why people pay so much attention to today's data. We know it's all bad. The new information will come in the summer," said Stephen Jen, co-founder of hedge fund Eurizon SLJ Capital.

He said the "tug of war" between those predicting a sharp V-shaped rebound and those expecting a slower recovery would not begin in earnest until May's data gave a picture of how economies were responding once lockdown measures have eased.

OIL DROPS, ITALY GETS REPRIEVE

Oil prices weakened sharply.

Crude prices have fallen in eight of the last nine weeks as demand collapsed due to the pandemic and supply cuts failed to keep up, leaving the world awash with oil and storage space running out. O/R

U.S. crude CLc1 slid more than 17%, or $2.90 to $11.34, while Brent crude LCOc1 futures slipped 4.76% to $20.42 a barrel.

The gold price fell 0.61% to $1,717 per ounce XAU= as investors shifted away from the safe-haven metal into riskier assets. government bond yields IT10YT=RR dropped between 13 and 17 basis points after S&P Global late on Friday left the country's credit rating in investment grade territory.

Investors had feared the ratings agency would cut heavily-indebted Italy to 'junk'. German 10-year bond yields DE10YT=RR were little changed, while U.S. Treasury yields rose US10YT=RR .

The U.S. dollar fell as the broader upbeat mood encouraged investors to move back into other currencies.

The dollar index, which measures the greenback against a basket of currencies, dropped 0.4% to a one-week low of 99.84 =USD .

The euro gained 0.4% to $1.0857 EUR= , while sterling strengthened 0.4% GBP= and the Japanese yen firmed a similar amount JPY= , hitting its strongest since April 15.

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https://tmsnrt.rs/2VUwVsE

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Jan Harvey and Alex Richardson)

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