Published: Tue, March 24, 2020
Markets | By Otis Pena

Wall Street set to bounce from three-year lows

Wall Street set to bounce from three-year lows

The rally comes in the midst of moves by governments to shut down much of Canada's economic heartland in an effort to slow down the coronavirus outbreak.

The S&P/TSX Composite Index rose as much as 10%, the biggest intraday jump since 2008, after falling to a 2011 low on Monday.

US stock index futures jumped 5% to their daily upper trading limit on Tuesday, rebounding from a brutal coronavirus-driven selloff on signs that Washington was nearing a deal on a $2 trillion economic rescue package. The Shanghai Composite Index was 2.3% higher at 2,722.44 and Hong Kong's Hang Seng gained 4.5% to 22,663.49.Australia's S&P-ASX 200 gained 4.2% to 4,735.70 and India's Sensex added 3.1% to 26,776.71.

The Canadian dollar rose 0.2% to C$1.4466 per US dollarThe 10-year government bond yield rose 8.1 basis points to 0.857%.

The blue-chip index, which has erased over three years of gains in one month, is now on track for its second best day in almost 12 years. "There is a plan, and the world will continue going on tomorrow and the next day, the next week", said Jake Dollarhide, chief executive officer at Longbow Asset Management in Tulsa, Oklahoma.

Suncor Energy Inc cut its 2020 production outlook and suspended share repurchases for the year following the decline in crude oil prices and due to the economic impact of the virus outbreak.

While the rescue package and the Fed's historic boost will ease some pain in financial markets, traders remained doubtful of a long-lasting recovery without evidence of a peaking in the number of new COVID-19 cases.

COVID-19 cases in United States top 16,000: Johns Hopkins University
Even if America cuts its rate of transmission in half, roughly 650,000 people could be infected in the next couple months. As of 12:45 CET (07:45 EDT, 04:45 PDT) there were 26,900 confirmed cases of coronavirus in the U.S. , with 348 deaths.

Data on Monday showed USA business activity hit a record low in March, bolstering views the economy was already in what Longbow Asset Management's Dollarhide called "a government mandated recession".

Boeing rose over 11% and was the top gainer among Dow components.

The Dow Jones Industrial Average jumped over 1,400 points higher after the opening bell on Tuesday, gaining over seven percent. After negotiations dragged through the night, a Senate vote could come later Tuesday.

The market was substantially off the day's highs, however, and analysts remained pessimistic that oil prices would stage an extended recovery amid the worsening coronavirus pandemic and the ongoing oil price war between Saudi Arabia and Russian Federation.

The S&P 500 was up 5.4 per cent early on Wednesday morning.

In energy markets, benchmark USA crude rose $1.40 to $24.76 per barrel in electronic trading on the New York Mercantile Exchange, while Brent crude, used to price worldwide oils, added $1.17 to $28,20 per barrel in London.

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