Dow Futures Extend Gains as Global Coronavirus Death and Infection Rates Slow

With global coronavirus death rates slowing, and U.S. stocks rising, some investors are starting to look towards the end of the deadly pandemic.

The Tuesday Market Minute

  • Global stocks rally for a second consecutive session as investors look to plateauing coronavirus death rates as a sign the pandemic may be easing.
  • U.S. infections continue to rise, however, at the fastest rate in the world, although New York Governor Andrew Cuomo says he's cautiously encouraged by slowing rates of growth in his state.
  • U.K. Prime Minister Boris Johnson remains in intensive care following his move to a hospital over the weekend, with questions as to who is leading the country's coronavirus strategy continuing to linger.
  • Global oil prices extend gains amid reports that OPEC leaders will agree to production cuts if U.S. drillers are willing to participate.
  • U.S. stock futures suggest another solid open on Wall Street with the S&P 500 poised for a 60 point gain as the benchmark looks set to rise 20% from its late March nadir.

U.S. equity futures rallied for a second consecutive session Tuesday, while world stocks added to recent gains and oil prices jumped higher, as investors continue to bet that the coronavirus death rate will soon peak, ending the worst global pandemic in more than a century.

With China reporting no new coronavirus deaths since the outbreak was first recognized in early January, and officials in hard-hit countries such as Spain and Italy reported a slowdown in the number of overnight fatalities, markets are beginning to price in both the ultimate end to the pandemic and the value of trillions in support pledged by governments and central banks around the world.

In the U.S., where more than 90% of the country's citizens are under some form of "stay-at-home" instruction, resulting in the loss of at least 10 million jobs, New York Governor Andrew Cuomo has said death rates in his state, by far the most affected, have plateaued for the past three days.

Still, with more than 1.3 million people around the world infected by the respiratory-focused virus, no workable vaccine near term and failed efforts at universal testing in some of the world's richest countries, bearish investors aren't quite ready to latch onto a stock market rally that has seen the Dow Jones Industrial Average gain more nearly 22% since hitting a 2016 low on Friday, March 23.

U.S. equity futures continued to rally nonetheless, however, following stronger-than-expected industrial production data from China and speculation that OPEC leaders, as well as non-member allies such as Russia, will agree to significant production cuts at their emergency teleconference Thursday.

Contracts tied to the Dow suggest an 805 point opening bell gain for the 30-stock average, while those linked to the S&P 500, which has gained 19% since it March 23 nadir but remains 213% south of its February 19 peak, is poised for an 83 point advance.

Crude prices extended gains, as well, amid reports that Russia and Saudi Arabia will agree to cut production and stabilize oil markets, which have fallen some 60% since the start of the year amid a perfect storm of oversupply and collapsing demand, as long as U.S. drillers are willing to participate.

This caveat will likely raise major antitrust concerns at home, but could nonetheless work if the cuts were ordered by the government, which isn't subject to the same antitrust statutes. 

Brent crude futures contracts for June delivery, the benchmark reference for around 60% of global crude purchases, were last seen 31 cents higher from their Monday closing price in New York and changing hands at $33.36 per barrel in early European trading.

WTI crude futures for May delivery, which are more tightly connected to domestic gas prices, were marked 82 cents higher at $26.90 per barrel.

Elsewhere, European stocks rallied for a second straight day as new case rates and fatalities in Italy, Spain and France showed signs of slowing and German reported a stronger-than-expected gain of 0.3% in February industrial output.

The region-wide Stoxx 600 was marked 2.84% higher in the opening hours of trading, while Germany's DAX performance index added 4% and Italy's FTSE MIB gained 4.6%.

In Britain, where Prime Minister Boris Johnson remains in intensive care following his March 26 coronavirus infection, the benchmark FTSE 100 was marked 2.6% higher as the pound held at 1.2367 against the U.S. dollar.

Johnson, 55, is reportedly not on a ventilator but has been given oxygen at various times overnight as part of his care in St. Thomas' hospital in central London.

Overnight in Asia, a fresh $950 stimulus package from Japan's Prime Minister, Shinzo Abe, helped both the yen and the Nikkei 225 in overnight trading, as the benchmark gained 2.01% to close at 18,950.18 points, even as states of emergency for several prefectures, including Tokyo, are expected later this week.