Global stocks move higher ahead of crucial OPEC meeting
Global stocks posted small gains on Thursday on hopes that the coronavirus outbreak may be slowing in the United States and Europe. Oil futures, meanwhile, are rising ahead of a meeting between Russia and OPEC to discuss production cuts.
In Europe, London’s FTSE 100 and Germany’s DAX advanced by less than 1% in morning trading. France’s CAC 40 opened higher but quickly slipped into negative territory.
Australia’s S&P/ASX 200 gained 3.5% in Asia Pacific, while South Korea’s Kospi rose 1.6%. Hong Kong’s Hang Seng added 1.3%, while the Shanghai Composite was up just 0.4%. Japan’s Nikkei 225 was the regional outlier, closing 0.4% lower.
US stock futures, meanwhile, were volatile. Dow futures gave up earlier gains to trade 64 points, or 0.3%, higher. Futures for the S&P 500 and Nasdaq were marginally higher.
Wall Street rallied Wednesday on rising optimism that the coronavirus spread in hot spot countries is slowing. The Dow finished up 3.4%, or 780 points, closing above 23,000 points for the first time in nearly a month. The S&P 500 closed 3.4% higher. The Nasdaq ended the day up 2.6%.
“Risk assets continued to rally on the perception that the global economy will open up again quicker than expected,” Stephen Innes, chief global markets strategist at AxiCorp, said in a note.
Johns Hopkins University changed the trending status for the United States to “down” on Wednesday, because of changes in the five-day moving average of new cases of the coronavirus. The data could change as more cases are reported.
More than 430,000 people in the United States have been infected with coronavirus, and more than 14,700 have died. Confirmed global cases approached 1.5 million on Thursday, with fatalities rising above 88,000.
Oil prices, meanwhile, are rising ahead of Thursday’s meeting between Russia and OPEC. The meeting, which was called by Saudi Arabia, comes after US President Donald Trump suggested that massive production cuts could be on the way and Saudi Arabia called for an “urgent” effort to restore “balance” to the oil market.
Oil prices plummeted earlier this year after Saudi Arabia and Russia abandoned coordinated production cuts that had been in place for years. The collapse was made even worse by the coronavirus pandemic, which caused demand from airlines, manufacturers and motorists to evaporate.
“A positive outcome for oil prices from the OPEC+ meeting would be a global agreement to cut output beyond OPEC and Russia. That would require cuts from the US, and smaller non-OPEC producers,” said Innes, adding that such a result seems unlikely.
ExxonMobil, the largest US oil producer, has insisted that “the operation of the free market is the most efficient means of resolving the extreme supply and demand imbalances.”
US oil futures jumped 5.5% to trade at $26.46 a barrel, following a 6.2% surge on Wednesday. Brent crude, the global benchmark, was trading 3.3% higher at $33.92 a barrel. For US oil prices to shift back towards $40 a barrel, “there will need to be a global relaxation on social distancing behavior,” Innes said.