Friday, 3 April 2020

Markets rise even as economists fear severe economic contraction

Markets were mostly higher on Thursday.

The S&P 500 surged 2.3 percent, the STOXX Europe 600 rose 0.4 percent and the Shanghai Composite jumped 1.7 percent. However, the Nikkei 225 fell 1.4 percent.

Oil prices surged as US President Donald Trump tweeted that he expects Saudi Arabia and Russia to reach an agreement to significantly cut production. West Texas Intermediate crude rose 24.7 percent and Brent rose 21 percent.

However, Manish Raj, chief financial officer at Velandera Energy, noted that “skepticism remains in the market whether the said cuts would actually be made”.

“All the fine details seem to still be up in the air so President Trump’s tweet might have been premature,” said Edward Moya, senior market analyst at Oanda.

Meanwhile, the COVID-19 pandemic remains a threat to markets, with confirmed cases topping one million on Thursday.

Financial ratings agency Fitch on Thursday predicted that the US and eurozone economies would contract this quarter by up to 30 per cent on an annualised basis.

The US Labour Department reported that 6.65 million workers filed for unemployment benefits last week, the most ever recorded.

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