By Geoffrey Smith
Investing.com — The G7 is holding a conference call about the coronavirus, while the global rebound in risk assets continues, without being fully convincing. Oil gains sharply as ‘OPEC+’ ministers descend on Vienna to discuss further output cuts – and it’s Super Tuesday in the race for the Democratic Party’s presidential nomination. Here’s what you need to know in financial markets on Tuesday, March 3rd.
1. G7 talks virus
World markets are holding their breath to see what the G7 – a body that has done its best to make itself irrelevant in recent years with its own divisions – can deliver in the way of coordinated economic policy support in the face of the spreading coronavirus.
Newswire reports suggest finance ministers and central bank governors will hold a conference call on the subject at 7 AM ET (1200 GMT), following on from a string of individual statements by the Federal Reserve, Bank of Japan, ECB and Bank of England, all committing themselves to keeping financial markets orderly and taking “appropriate” action to support the economy.
According to Reuters, the draft communique from the call did not mention concrete or coordinated measures. However, there was action overnight from the Reserve Bank of Australia, which cut its key rate to a new record low of 0.5%, and its Malaysian counterpart, which also cut by 25 basis points to 2.50%.
2. Global bounce in risk assets continues
The sharp rally in U.S. equity markets on Monday was followed overnight by gains in Asian and European stocks, despite lingering concerns that looser monetary policy – expectations for which were chiefly responsible for the bounce – will be of limited use in fighting the virus.
China’s main stock indices rose by between 0.5% and 0.9%, while Europe’s bourses rebounded more vigorously – the benchmark gained 2.2%. In all cases, this represents little more than a return from levels that appeared deeply oversold in the short term.
In commodity markets, futures rebounded nearly 4% to $48.51 a barrel, while rose 3.3% to $53.63, on hopes both for monetary stimulus and for an additional cut in output of as much as 1 million barrels a day from OPEC and its allies. Minister are flying into Vienna on Tuesday ahead of a meeting scheduled to take place on Thursday and Friday.
3. U.S. stocks set to open higher
The rebound in U.S. stocks is set to continue at the opening, in the absence of fresh shocks on the coronavirus front.
By 6:35 AM ET (1135 GMT), the contract was up 183 points or 0.7%, while the contract was up 0.5% and the contract was up 0.8%. The Dow future is now 9.7% below its pre-outbreak peak. However, credit spreads remain under pressure, suggesting that there is still plenty of skepticism as regards the sustainability of the recovery.
The virus continues to spread across the U.S., however, with the state of Georgia reporting its first two cases and the overall number of confirmed cases rising to 105. The U.S. death toll remains at six, of which five were in the same care home in Seattle, Wa.
The mood is being improved by increased signs of a return to normal levels of economic activity in China. Hon Hai Precision, which assembles the iPhone for Apple (NASDAQ:), said it expects “normal” working conditions at its Chinese factories to be resumed by the end of March.
4. Mester, Evans to add to rate chatter
The data calendar for Tuesday is relatively light, with appearances by Fed officials and likely to spark more interest than either numbers or the Institute of Supply Management’s New York Business Conditions index.
In the same vein, the ’s weekly update on U.S. oil supplies is likely to be overshadowed by newswire updates out of Vienna ahead of the ‘OPEC+’ meeting.
Earlier, the euro zone’s remained stuck at 1.2% in February, with the index surprisingly ticking up to the same rate. The euro zone’s remained at a 10-year low of 7.4%.
The U.K.’s , meanwhile, rose to a 13-month high of 52.6, a development that was all but lost in the noise around the coronavirus outbreak.
5. Super Tuesday for the Democrats
The race for the Democratic Party’s presidential nomination reaches a critical stage, as voters in 14 states – including the key states of California and Texas — head to the polls in Super Tuesday.
The field has essentially narrowed to four candidates after Minnesota Senator Amy Klobuchar and South Bend Mayor Pete Buttigeig both withdrew and endorsed former Vice President Joe Biden.
Biden is widely seen as gathering voters from both of those two, and their rejection of Mike Bloomberg is likely to give Biden an even greater chance of becoming the standard bearer for moderate Democrats. The other big question of the day is to what extent – if at all – Sen. Elizabeth Warren can dent Vermont Sen. Bernie Sanders’ lead among the progressive wing of the party.