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GLOBAL MARKETS-Stock rally loses steam, virus keeps safe-havens alive

Published 30/01/2020, 08:52 am
© Reuters.  GLOBAL MARKETS-Stock rally loses steam, virus keeps safe-havens alive
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(Adds close of U.S. markets)

* Coronavirus death toll rises to 133

* China state economist sees hard hit to 1st-qtr growth

* Fed leaves rates unchanged, "strong" job market cited

By Herbert Lash

NEW YORK, Jan 29 (Reuters) - Global equity markets closed little changed on Wednesday as strong results from Apple and others provided a lift, but concerns about the coronavirus outbreak in China kept enthusiasm in check and a safe-haven bid in gold and the dollar alive.

The yield on benchmark U.S. Treasuries and German bunds fell as foreign governments evacuated citizens from the virus' epicenter in China and the World Health Organization voiced "grave concern" about person-to-person infection in three countries. death toll in China from the virus rose by 27 to 133, and another 1,459 cases were confirmed.

A Chinese government economist said the outbreak could cut China's first-quarter growth by one point to 5% or lower as the crisis hits sectors from mining to luxury goods.

The Federal Reserve left interest rates unchanged at its first policy meeting of the year. Officials pointed to continued moderate U.S. economic growth and a "strong" job market. Since the Fed cut rates in October, policymakers have kept their target rate in a range of 1.50% to 1.75%.

Treasury yields were little changed after the Fed released its policy statement. Benchmark U.S. stock indexes initially ticked up to the day's highs before paring gains to close at break-even.

The market's muted reaction to the virus' spread, which is close to the number of people infected by the SARS outbreak in 2003, is very positive, said Kristina Hooper, chief global market strategist at Invesco in New York.

"The fact that stocks have held up today in light of the negative news on the novel coronavirus is a sign that the Fed is a dominant factor in keeping markets calm," Hooper said.

The practice of buying $60 billion every month of U.S. Treasury bills to ensure adequate short-term liquidity in bank funding markets will remain in place at least into April, as will a related offering of repurchase agreements, the Fed said.

Strong results from Santander SAN.MC helped bank stocks in Europe. Gains in Apple Inc AAPL.O and Boeing (NYSE:BA) Co BA.N lifted shares on Wall Street, but a spate of disappointing results from AT&T T.N and Advanced Micro Devices Inc AMD.O , among others, weighed on equities.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.01% as emerging market stocks lost 0.38%. Mexico's bolsa index .MXX bucked the downdraft in emerging markets, rising about 0.93%.

U.S. President Donald Trump signed a new trade agreement with Canada and Mexico into law on Wednesday, replacing the 26-year-old North American Free Trade Agreement.

The pan-European STOXX 600 index .STOXX rose 0.44%, with the euro-zone banks index .SX7E gaining 1%.

Santander SAN.MC posted higher quarterly net profit, boosted by a solid underlying performance in Brazil and capital gains. Santander rose 4.4%.

Apple AAPL.O gained 2.1% after reporting earnings for the holiday shopping quarter above analysts' expectations, even as it braced for more supply disruptions in virus-hit China. Dow Jones Industrial Average .DJI rose 11.6 points, or 0.04%, to 28,734.45. The S&P 500 .SPX lost 2.84 points, or 0.09%, to 3,273.4 and the Nasdaq Composite .IXIC added 5.48 points, or 0.06%, to 9,275.16.

Spot gold prices rose as concerns about economic growth due to the coronavirus buoyed safe-haven demand, but U.S. gold futures GCv1 settled little changed at $1,570.40 per ounce.

Oil was mixed, weighed by worries about how the coronavirus could affect demand and swelling U.S. crude inventories. Talk that the Organization of the Petroleum Exporting Countries could extend crude output cuts provided support.

Brent crude LCOc1 gained 30 cents to settle at $59.81 at barrel, while U.S. crude fell 15 cents to settle at $53.33.

Demand strengthened for the dollar index and the safe-haven Japanese yen firmed modestly. A risk-off tone returned to currency markets amid uncertainty about the coronavirus.

The dollar index .DXY rose 0.07%, with the euro EUR= down 0.14% to $1.1005. The yen JPY= strengthened 0.09% versus the greenback at 109.06 per dollar.

Benchmark 10-year U.S. Treasury notes US10YT=RR rose 18/32 in price to push down its yield to 1.5805%.

https://tmsnrt.rs/2t3r6Pg Tracking the novel coronavirus interactive

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