BEIJING – Global stock markets turned higher Wednesday, extending days of volatility, as investors weighed the economic impact of the virus outbreak and Joe Biden's big gains in the Democratic primaries.
European indexes were up over 1% and Wall Street futures were pointing to similar gains on the open after a mixed performance in Asia.
Markets appeared unimpressed by the U.S. Federal Reserve's half percentage point rate cut on Tuesday and by a pledge from the Group of Seven industrialized countries to support the economy that included no specific measures. The S&P 500 index tumbled 2.8%, its eighth daily decline in nine days.
China, Australia and other central banks also have cut rates to shore up economic growth in the face of anti-virus controls that are disrupting trade and manufacturing. But economists warn that while cheaper credit might encourage consumers, rate cuts cannot reopen factories that have closed due to quarantines or lack of raw materials.
More reductions may give “limited support,” Jingyi Pan of IG said in a report. “Perhaps besides vaccines, there may be little quick and easy solutions to easing the shock for global markets.”
Sentiment seems to have been supported somewhat by Former U.S. Vice President Biden's revitalized presidential bid, with some investors seeing the moderate candidate as potentially more favorable to business than the more left-wing Bernie Sanders.
In Europe, London's FTSE 100 was up 1.4% to 6,811 while Germany's DAX added 1.1% to 12,110. France's CAC 40 rose 1% to 5,446.
On Wall Street, the S&P 500 future rose 2.1% and that for the Dow Jones Industrial Average was up 1.8%.
U.S. markets have fallen 11% since setting a record two weeks ago.
On Wednesday in Asia, the Shanghai Composite Index gained 0.6% to 3,011.67 while the Nikkei 225 in Tokyo added 0.1% to 21,100.06. Hong Kong's Hang Seng shed 0.2% to 26,222.07.
The Kospi in Seoul rose 2.2% to 2,059.33 after the government announced a $9.8 billion spending package to pay for medical supplies and aid to businesses that are struggling with disruptions to travel, auto manufacturing and other industries.
In another sign of U.S. investor caution, the yield on the 10-year Treasury sank below 1% for the first time in history. It was at 0.95% early Wednesday.
A smaller yield — the difference between the market price and what investors receive if they hold the bond to maturity — indicates traders are shifting money into bonds as a safe haven out of concern about the economic outlook.
Fed Chairman Jerome Powell acknowledged the ultimate solution to the virus challenge will have to come from health experts and others, not central banks.
The Fed has a long history of coming to the market's rescue with lower rates and other stimulus, which has helped this bull market in U.S. stocks become the longest on record.
The U.S. rate cut was the Fed's first outside a regularly scheduled meeting since the 2008 global crisis. That prompted some traders to think the Fed might foresee an even bigger economic impact than markets fear.
Benchmark U.S. crude gained 82 cents to $48.00 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 43 cents on Tuesday. Brent crude, used to price international oils, added 84 cents to $52.70 per barrel in London. It fell 4 cents the previous session.
The dollar gained to 107.55 yen from Tuesday's 107.12 yen. The euro fell to $1.1131 from $1.1171.