Global Stocks Edge Up as China Takes Steps to Contain Outbreak
January 22 2020 - 8:17AM
Dow Jones News
By Anna Isaac
Global stocks edged up on Wednesday as investors cheered Chinese
authorities' measures to contain the outbreak of a potentially
deadly virus.
Futures tied to the Dow Jones Industrial Average rose 0.2%. The
pan-continental Stoxx Europe 600 was largely flat, while Hong
Kong's Hang Seng Index ended the day 1.3% higher.
Hospitals are stepping up preventive measures, Chinese officials
said at a media briefing in Beijing. Authorities are recommending
people not go into or out of Wuhan, the central Chinese city where
the virus originated. Ministries and local governments are also
arranging refunds on plane and train tickets, banning tourist
groups from Wuhan, and organizing coverage of medical expenses,
analysts at Everbright Sun Hung Kai said in a note.
Investors have a high degree of confidence in the Chinese
government's ability to contain the virus, said James Athey, senior
investment manager at Aberdeen Standard Investments.
"The global macroeconomic impact of this virus in Asia, based on
what we know now, is likely to be very small," Mr. Athey said. "And
secondly, irrespective of the macro response, the market has been
trained to buy dips and it's done that today."
Ahead of the New York open, shares in International Business
Machines rose almost 4% in offhours trading after the technology
giant unexpectedly reported a slight gain in fourth-quarter
revenue, ending a streak of declines, after markets closed
Tuesday.
In Europe, yields on Italian government bonds rose sharply after
reports suggested Luigi Di Maio, a key member of the country's
ruling coalition, may step down. Mr. Di Maio's resignation could
trigger snap elections within the next six months, said Florian
Hense, economist at Berenberg Bank.
"Investors don't like uncertainty, but that's very much the
short-term response," said Mr. Hense. "The issue with Italy is that
it's a time bomb. If there's a global recession in the next 2-3
years, Italy would be a prime candidate for a debt crisis."
The yield on the 10-year Italian benchmark climbed to 1.468%
before easing back to 1.376%. It was the largest intraday move
since August 2019, according to Tradeweb. Shares in Italian banks
also fell, with Milan-based Banco BPM dropping 3.4%, while
UniCredit fell roughly 3.3%.
Among European equities, Amundi was one of the biggest gainers.
Europe's largest asset manager rose about 3% in Paris after it
agreed to buy Sabadell Asset Management for EUR430 million ($476
million) in cash to strengthen its business in Spain.
Later in the day, the U.S. National Association of Realtors will
also release figures for sale of existing homes in December. Low
borrowing costs and wage growth have helped to bolster the housing
sector in the past few months.
Write to Anna Isaac at anna.isaac@wsj.com
(END) Dow Jones Newswires
January 22, 2020 09:02 ET (14:02 GMT)
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