Europe Stocks Gain on China Lift; Yen, Gold Slip: Markets Wrap

Europe Stocks Gain on China Lift; Yen, Gold Slip: Markets Wrap

The Japanese yen pared its earlier decline after Apple Inc.’s announcement that it would miss revenue guidance for the March quarter due to the coronavirus outbreak in China. The pound fell after Prime Minister Boris Johnson’s envoy attacked the EU’s stance ahead of trade talks.

European equities climbed alongside U.S. index futures on Monday following China’s pledges to support its economy in the face of the coronavirus outbreak. Carmakers led a modest gain in the Stoxx Europe 600 Index, while HSBC Holdings Plc climbed before reporting earnings. Health-care giant Bayer AG dropped after losing its first U.S. trial over the herbicide dicamba. Contracts on the three main American indexes increased, though Wall Street was shut for a holiday and Treasuries didn’t trade. European bonds were mixed. The euro pared an earlier gain after closing at its lowest since early 2017 on Friday, while the dollar was steady against a basket of its biggest peers.

Global iPhone supply will be temporarily constrained as conditions in China return to normal more slowly than expected, Apple said in a statement. The announcement followed China’s plans to reduce corporate taxes and fees, which helped push up the benchmark CSI 300 Index. The index has now recouped its losses from an almost 8% tumble when trading resumed after the Lunar New Year break. The momentum failed to buoy other Asian markets, however, as stocks dipped in Seoul and Sydney while Japan’s Topix Index dropped after news the country’s economy shrank the most since 2014 last quarter.

Investors in risk assets are beginning the week on the front foot after China’s central bank also said it will let banks run up more non-performing loans. Bloomberg Economics estimated the country’s economy ran at just 40% to 50% capacity in the past week, underscoring the short-term damage done by the coronavirus. Cathay Pacific Airways Ltd., which counts on China and Hong Kong for about half of its revenue, gave a “significant” profit warning and blamed the pathogen.

“If the Chinese economy does recover and you’ve added all this fiscal and monetary stimulus into it as well, the situation could be that you have much stronger emerging markets into the second half,” Sunny Bangia, a fund manager at Antipodes Partners Ltd., said on Bloomberg TV. “A lot depends on how this virus gets contained and if it can morph into something more minor.”

Hubei, the province at the epicenter of the outbreak, reported 1,933 new cases, slightly higher than a day earlier. Concern also built around reports that more than 3,000 travelers on two coronavirus-stricken Carnival Corp. cruise ships are returning home, fanning out to more than 40 countries. Singapore’s government cut its growth forecasts, citing uncertainty over the length and severity of the outbreak. The country is expected to unveil a large stimulus package to mitigate the economic hit.

Elsewhere, Bitcoin fell as much as 8.4% from Friday, slipping back below $10,000. WTI crude oil held at about $52 a barrel.