Stocks gain as China says fewer new coronavirus cases

By Herbert Lash

NEW YORK (Reuters) – Global equity markets scaled fresh highs on Wednesday after China reported the lowest number of new coronavirus cases in two weeks, boosting hopes the epidemic will be contained and driving up the price of commodities sensitive to Chinese demand.

China confirmed 2,015 new cases of the deadly virus, the lowest daily increase since Jan. 30 as the total rose to 44,653. The report eased financial market concerns about the potential impact on both the Chinese and global economies.

The dollar hit a more than two-year high against the euro as investors poured money into U.S. stocks, even as Dale Fisher, a global expert associated with the World Health Organization, warned that the virus’ toll was just beginning outside China.

Crude prices surged on the slowing rate of infection, spurring hopes that demand in the world’s second-largest market for oil consumption may begin to recover.

Copper climbed on the belief that China, the biggest metals consumer, faces a short but sharper economic shock than first thought. How harsh the impact will be varies widely.

U.S. Treasury Secretary Steven Mnuchin said the national economic impact from the coronavirus outbreak is a one-time event that will not last beyond 2020.

Markets are clearly encouraged by the moderating trajectory of new and suspected cases of the virus, as well as the continued support of Federal Reserve monetary policy, said David Joy, chief market strategist at Ameriprise Financial.

Renewed enthusiasm among investors also is being driven by corporate earnings growth and a global economic recovery that was becoming evident before the coronavirus outbreak, he said.

Still, investor enthusiasm may be tested once economic data from late January and February begins to roll in, Joy said.

“By a number of measures, valuations are quite extended, making this rally something of a leap of faith,” he said. “I would not argue with anyone wishing to bank some of their profits.”

Stock indexes around the world hit new highs, including the three major Wall Street gauges, MSCI’s world index, the pan-European STOXX 600, Germany’s DAX, the S&P/TSX in Canada and the S&P/NZX 50 overnight in New Zealand.

MSCI’s gauge of stocks across the globe <.MIWD00000PUS> gained 0.57% and emerging market stocks rose 0.90%.

In Europe, the pan-regional STOXX 600 index <.STOXX> rose 0.63% and the DAX <.GDAXI> closed up 0.89%. Stronger iron ore and base metal prices lifted China-sensitive commodity <.SXPP> and auto stocks <.SXAP>.

On Wall Street, the Dow Jones Industrial Average <.DJI> rose 275.08 points, or 0.94%, to 29,551.42. The S&P 500 <.SPX> gained 21.7 points, or 0.65%, to 3,379.45 and the Nasdaq Composite <.IXIC> added 87.02 points, or 0.9%, to 9,725.96.

North Sea Brent crude, the global benchmark, rose more than 3%.

Brent crude <LCOc1> added $1.78 to settle at $55.79 a barrel while West Texas Intermediate, the U.S. benchmark, <CLc1> rose $1.23 to settle at $51.17 a barrel.

Gold prices traded little changed after touching a one-week low as risk sentiment improved.

U.S. gold futures <GCv1> settled 0.1% higher at $1,571.60 an ounce.

Overnight in Asia, mainland Chinese and Hong Kong shares rose almost 1% <.CSI300>. The offshore-traded yuan reached two-week highs <CNH=D3>. The Thai baht, Korean won and Taiwanese dollar, reliant on Chinese tourism and trade, gained 0.3% to 0.5% <THB=> <KRW=> <TWD=>.

The dollar index <.DXY> rose 0.28%, with the euro <EUR=> down 0.37% to $1.0874. The Japanese yen <.JPY=> weakened 0.25% versus the greenback at 110.08 per dollar.

Benchmark 10-year U.S. Treasury notes <US10YT=RR> fell 11/32 in price to yield 1.6282%.

Yields on core 10-year German government bonds rose 1.6 basis point on the day, at -0.37% <DE10YT=RR>, on hopes the spread of the coronavirus may have peaked.

(Reporting by Herbert Lash; Editing by Cynthia Osterman)