TOKYO (AP) — Stock markets rose Wednesday on optimism that China’s latest actions may help curtail some of the expected economic damage from the virus outbreak.
Investors welcomed a decision by China’s central bank to inject $57 billion into its markets. The move is the latest step by Beijing to soften the financial blow of the recent virus outbreak.
Worries about the potential global economic impact of a protracted outbreak rattled markets in recent weeks, erasing the S&P 500’s gains last month.
France’s CAC 40 rose 0.8% to 5,982, while Germany’s DAX gained 1.1% to 13,422. Britain’s FTSE 100 was up 0.6% to 7,482. U.S. shares were set to drift higher, with Dow and S&P 500 futures both up 0.7%.
Japan’s benchmark Nikkei 225 gained 1.0% to finish at 23,319.56. Australia’s S&P/ASX 200 added 0.4% to 6,976.10. South Korea’s Kospi was up 0.4% at 2,165.63. Hong Kong’s Hang Seng edged up 0.3% to 26,754.04, while the Shanghai Composite gained 1.3% to 2,818.09.
“Risk sentiment remains on the mend,” said Jingyi Pang, market strategist at IG in Singapore. “Although this remains the ebb and flow around an issue such as the coronavirus with the impact still under assessment.”
The gains reflected a broad rally on Wall Street overnight that drove the Dow Jones Industrial Average more than 400 points higher and gave the S&P 500 its best day in more than five months.
The gains also pushed the tech-heavy Nasdaq to an all-time high and added to a solid start to February for the broader market after a downbeat January.
Apple and Microsoft were among the tech-sector standouts. Like other major technology companies, they rely heavily on doing business with China. Health care, industrial, financial stocks also notched solid gains.
China’s latest measure to shore up its markets follows an announcement from Monday that the government would put $173 billion into its markets as they reopened from an extended break.
The world’s second-largest economy is in lockdown that is threatening economic growth there and globally. More companies, including Sony, are warning investors of a potential hit to revenue and profit because of the virus. More than 20,000 cases have been confirmed globally, along with over 400 deaths. The cases have been mostly in China.
Rising expectations of further rate cuts by the U.S. Federal Reserve may have also helped lift stocks. Investors now foresee an overwhelming likelihood of at least one Fed rate cut this year, with nearly half expecting two cuts, according to data from CME Group.
The Fed has recently indicated that it’s comfortable with rates at their current level. But traders seem to expect that economic anxiety and damage resulting from China’s viral outbreak will lead the Fed to further ease borrowing rates.
Energy markets were lifted by expectations that OPEC countries are considering cuts to production to make up for the fall in demand from China due to the virus outbreak.
With OPEC and Russia holding a technical meeting in Vienna on Wednesday, the U.S. contract for crude oil was up $1.23to $50.84 a barrel. It fell 50 cents on Tuesday. Brent crude oil, the international standard, gained $1.35 to $55.31a barrel.
The dollar rose to 109.66 Japanese yen from 109.07 yen on Tuesday. The euro weakened to $1.1021 from $1.1053.
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