NEW YORK (AP)
Stocks are opening moderately higher on Wall Street following weakness overseas as global trading remains unstable amid deep uncertainty over how bad the economic toll of the coronavirus will be. The tentative climb early Wednesday came a day after a big gain for the S&P 500 vanished suddenly. Investors have been blindly trying to guess how badly the outbreak will hurt corporate profits as travel and businesses shut down across the world. France’s central bank said that country’s economy has entered a recession with a 6% drop in the first three months of the year.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Global shares mostly fell Wednesday amid uncertainty over the coronavirus outbreak, which continues to claim more lives around the world and keep vast swathes of the global economy under lockdown.
France’s CAC 40 index dropped 1.5% to 4,371 after the national central bank said the economy was in recession and was estimated to have contracted by 6% in the first quarter. Germany’s DAX slipped 0.9% to 10,265 and Britain’s FTSE 100 shed 1.2% to 5,638. U.S. shares appeared set for small gains, with the futures for the Dow industrials and the S&P 500 up 0.5%.
A rally on Wall Street proved short-lived in a market dominated by sharp swings responding to the ups and downs of the news about the pandemic.
“The recent risk rally faded quickly despite recent stimulus efforts from both monetary and fiscal authorities, with market players coming to terms with the unabated rise in fatalities as the virus continues to spread,” Prakash Sakpal and Nicholas Mapa, economists at ING, said in a report.
In Asia, Japan’s state of emergency kicked in and focused on seven urban areas, including Tokyo, with strong government requests for people to stay home and restaurants and stores to close for a month. It was unclear how effective the entirely voluntary measures would be.
Japan’s Nikkei 225 gained 2.1% to 19,353.24, on stronger than expected machinery orders.
Goldman Sachs said in a report that Japan’s economy is headed to a record 25% contraction in the current quarter, with exports diving by 60% in the April-June period. The contraction for the world’s third-largest economy would be a record, since GDP, or gross domestic product, began to be tracked in 1955.
Japan’s economic activity will likely recover with the third quarter and GDP is expected to grow 3.1% in 2021, it said.
Benchmark U.S. crude oil rose 81 cents to $24.44 a barrel Wednesday in electronic trading on the New York Mercantile Exchange. It got a boost from comments by President Donald Trump to Fox TV that he expects Russia and Saudi Arabia to resolve their price war. U.S. crude had fallen $2.45, or 9.4%, to settle at $23.63 per barrel Tuesday.
Brent crude, the international standard, gained 16 cents to $32.03 on Wednesday.
While many investors are preoccupied with the pandemic, energy remains another major factor driving trading.
The meeting of the so-called OPEC+ is due to be held on Thursday. It was delayed amid bickering between Saudi Arabia and Russia following a meeting in March where OPEC and other nations led by Russia failed to agree to a production cut to reflect collapsing demand due to the pandemic. Prices then plunged.
Even Thursday’s meeting was in doubt after Iran demanded greater clarity on the scale of U.S. oil production before talks can start.
For “more immediate market stability concerns, all eyes and ears remain trained on the success of the OPEC+ meeting on Thursday,” Stephen Innes of AxiCorp said in a commentary.
In other Asian trading, Australia’s S&P/ASX 200 shed nearly 0.9% to 5,206.90, while South Korea’s Kospi lost 0.9% to 1,807.14. Hong Kong’s Hang Seng fell 1.2% to 23,970.37 and the Shanghai Composite dipped 0.2% to 2,815.37.
India’s Sensex lost 0.6%. Shares rose in Taiwan and Malaysia but fell in other Southeast Asian markets.
Even though economists say a punishing recession is inevitable, some investors are hoping a peak in new infections might provide clues about how long and durable the downturn might be.
Many professional investors say they’ve been wary of a recent upsurge in share prices and expect more bouts of volatility. The S&P 500 has rallied nearly 19% since hitting a low on March 23, though it’s still down 21.5% from its record set in February.
COVID-19 has already claimed at least 82,000 lives around the world, infecting more than 1.4 million people. The U.S. leads the world in confirmed cases with nearly 400,000, according to a tally by Johns Hopkins University.
More economic misery is on the horizon. Economists expect a report on Thursday to show that 5 million Americans applied for unemployment benefits last week as layoffs sweep the country. That would bring the total to nearly 15 million over the past three weeks. Analysts also expect big companies in upcoming weeks to report their worst quarter of profit declines in more than a decade.
In currency markets, the dollar inched up to 108.92 Japanese yen from 108.80 yen Tuesday. The euro slipped to $1.0870 from $1.0892 .
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