May 13, 2020 / 11:43 PM / 2 months ago

Equities edge higher, bonds rise on hopes of stimulus

NEW YORK (Reuters) - Global equity benchmarks gained late on Thursday, with safe-haven bonds also rising as investors shrugged off disappointing U.S. jobs data and took comfort in the possibility of states re-opening after lockdowns and fueling an economic recovery.

Stock markets have rallied more than 30% since their March lows following unprecedented government stimulus measures and central bank interventions to counter the impact of economic lockdowns. Federal Reserve Chairman Jerome Powell quashed talk of U.S. interest rates going negative to kick-start investment.

Like the Fed, Bank of England chief Andrew Bailey said Thursday it was not considering “the very big step” of sub-zero rates, while the Bank of Japan said it was not planning to go even deeper into negative territory.

U.S. President Donald Trump said on Thursday that he would be open to negotiating another possible stimulus bill.

“We should see accelerating spending in the future, which is very good for economic growth,” said Jamie Cox, managing partner at Harris Financial Group.

Cox said a J.P. Morgan report showing credit card spending dropping 40% in March and early April compared with last year suggests non-essential spending will trend higher as lock-downs roll off.

MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.03%.

The Dow Jones Industrial Average .DJI rose 377.37 points, or 1.62%, to 23,625.34, the S&P 500 .SPX gained 32.5 points, or 1.15%, to 2,852.5 and the Nasdaq Composite .IXIC added 80.55 points, or 0.91%, to 8,943.72.

Initial U.S. claims for state unemployment benefits totaled a seasonally adjusted 2.981 million for the week ended May 9, the Labor Department said on Thursday, nearly 500,000 more than anticipated by economists polled by Reuters.

Safe-haven assets such as U.S. government bonds also inched higher. Benchmark 10-year notes US10YT=RR last rose 7/32 in price to yield 0.6282%, from 0.651% late on Wednesday.

The dollar index =USD rose 0.14%, with the euro EUR= down 0.16% to $1.0799.

“Absent notable news on the vaccine front, it’s hard to envision a scenario where the market goes up significantly from here,” said Brian Price, head of investments at Commonwealth Financial Network. “I would say the same from the down side.”

“It’s most likely going to be range bound,” Price said.

China has reimposed movement restrictions near its borders with North Korea and Russia after a new coronavirus outbreak was detected there and South Korea was working to contain an outbreak centered around bars and nightclubs in Seoul.

FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, U.S., April 26, 2020. REUTERS/Jeenah Moon

“It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,” WHO emergencies expert Mike Ryan told an online briefing on Wednesday.

A dip in U.S. crude oil stockpiles helped push prices higher. The International Energy Agency estimated oil demand will have a record fall in 2020, keeping Brent just below $30 a barrel. [O/R]

U.S. crude CLc1 recently rose 8.9% to $27.54 per barrel and Brent LCOc1 was at $31.12, up 6.61% on the day.

Reporting by David Randall; additional reporting by Jessica DiNapoli; Editing by Bernadette Baum and Dan Grebler

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