The Wednesday Market Minute
- Global stocks record first back-to-back rally since early February after U.S. lawmakers agree an historic $2 trillion coronavirus relief bill.
- Senate Majority Leader Mitch McConnell called it a "wartime level of investment" that will provide $3,000 checks to the vast majority of American households and extended jobless benefits.
- Formal votes on the deal in both Houses of Congress will take place later today, with the President expected to sign it shortly after.
- European stocks follow Asia, trading firmly higher across the board as investors continue to return to risk markets around the world.
- U.S. equity futures suggest more gains on Wall Street, following the Dow's best gain since 1933, ahead mortgage data at 7 am Eastern time and durable goods orders 90 minutes later.
U.S. stocks may struggle to rally for a second consecutive session Wednesday, following the biggest gain for Dow in nearly ninety years, after Senate lawmakers agreed a $2 trillion coronavirus relief bill that will help prop-up the hobbled domestic economy.
Senate Majority Leader Mitch McConnell said the unprecedented amount of cash -- a sum many times larger than the U.S. Defense budget -- would be a "wartime level of investment into our nation" after reaching an agreement with rival Democrats in the early hours of Wednesday monrnig.
If approved by both Houses of Congress later today, and then signed by President Donald Trump, the bill will provide around $500 billion in direct corporate loans and a further $500 billion in immediate cash to millions of American households.
Alongside the Federal Reserve's extraordinary moves earlier this week, including its pledge to buy corporate bonds, roll out loan programs to small and medium-sized businesses and purchase unlimited amounts of government debt and mortgage-backed securities, the U.S. is ready to throw $6 trillion in front of the oncoming wave of coronavrius-lead damage to the domestic economy -- or nearly a third of overall GDP.
"Help is on the way, big help and quick help," said Democratic Senator Chuck Schumer.
The historic agreement, which followed days of partisan rancor in Washington, gave and immediate boost to U.S. equity futures, which look set to record their first back-to-back gains since early February.
However, rising market volatility, and questions over the fate of the Senate bill, its transmission to the real economy and the ongoing damage the coronavirus outbreak continues to ravage helped pare earlier gains for the three major indicies.
Contracts tied to Dow Jones Industrial Average, which roared by more than 2,100 points yesterday in the biggest single-day advance since 1933, are now indicating a Wednesday opening-bell gain of 100 points -- all of which will come from a surge in Boeing Co (BA) - Get Report shares -- while those linked to the S&P 500 suggest a 24 point retreat for the broader benchmark.
Boeing shares extended their run of gains in pre-market trading Wedensday, lifting the planemaker to the highest levels in nearly two weeks, follow last night's Senate aid package agreement and more reports that is grounded 737 MAX jet is primed to return to service later this summer.
Market volatility ticked higher with the CBOE's key VIX gauge rising another 8.2% to 66.65 points -- but still well shy of the 82.69 point record high it hit early last week.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, eased 0.6% to 101.34 while benchmark 10-year U.S. Treasury note yields backed up to 0.856% as investors extended their return into risk markets around the world.
European stocks were also firmly in the green Wednesday before paring gains, with the Stoxx 600 rising 1.2% by mid-day trading as lawmakers in Germany began to vote on the details of their $810 billion stimulus bill, which includes billions in new borrowing.
Britain's FTSE 100, meanwhile, edged 1.1% higher in early London trading as the country moved into its second day of lockdown following an unprecedented national order from Prime Minister Boris Johnson earlier this week.
Global oil markets, however, continued to sputter, with early gains Wednesday coming largely from the pullback in the U.S dollar, as investors continue to price in slower near-term demand amid travel restrictions and business closures around the world.
Brent crude futures contracts for May delivery, the global benchmark, were last seen 83 cents lower from their Tuesday close in New York and trading at $26.32 per barrel, while WTI contracts for the same month were marked 41 cents higher at $23.60 per barrel.
Asia stocks rallied hard in the overnight session, with Japan's Nikkei 225 rising just over 8% to close at 19,546.63 points as the yen eased to 111.54 against the U.S. dollar as investors added to risk holdings around the region following a Bank of Japan move to lend around $90 billion in dollars to domestic banks.
The MSCI ex-Japan benchmark, meanwhile, was marked 4.5% higher following yesterday's decade-best gains for the regional index heading into the final hours of trading.