The Friday Market Minute
- Global stocks mixed, but volatility remains extreme, as investors hope near-term U.S. stimulus will support beaten down markets.
- House Speaker Nancy Pelosi says lawmakers and the White House are "close" to an agreement, which could be unveiled Friday.
- Coronavirus cases around the world reach 128,000, with some 4,720 deaths: China says Wuhan infections appear to have peaked, but Europe cases are rising rapidly.
- VIX volatility levels near record highs, whip-sawing U.S. futures prices and likely threatening larger-than-usual moves in the Friday session.
- Futures hit "limit up" levels at 7:15 am Eastern time as European stocks extend gains.
- U.S. equity futures suggests a solid rebound on Wall Street Friday, with the S&P 500 called 113.36 points higher after slumping into into bear market territory yesterday.
U.S. equity futures surged higher Friday, following the worst day on Wall Street the October 1987 crash, as investors hoped a nascent agreement between the Democratic lawmakers and the White House would result in an economic stimulus package aimed at tackling the impact of the global coronavirus pandemic.
House Speaker Nancy Pelosi said late Thursday that the two sides were "near to an agreement" that would provide free coronavirus testing, as well as paid sick leave, for Americans suffering what now appears to be the worst health crisis in at least a generation.
Treasury Secretary Steve Mnuchin told TheStreet's founder, Jim Cramer that the two sides were "very close" to a deal that would build on the $8.3 billion in aid approved by lawmakers earlier this week.
The fiscal move would follow the Federal Reserve's decision to pump an additional $1.5 trillion into the financial system yesterday, via three separate longer-term repo operations.
However, the agreement looks likely to sport short of any direct aid for beaten-down financial markets, which have lost more than $14 trillion in equity value around the world over the past month.
Wall Street's losses, including yesterdays historic near-10% declines, have not only pulled stocks into correction territory, but also wiped out more than half of the gains recorded since President Donald Trump was elected in November 2016.
And while stocks look set for a solid open based on overnight future prices -- which include a 997.38 point gain for the Dow Jones Industrial Average and a 113.36 point bounce for the S&P 500 as futures hit "limit up" levels in pre-market trading.
Overnight futures trading, in fact, has swung by more than 1,000 points as the CBOE's volatility gauge, the VIX, touched 72 points, the highest since the global financial crisis, before easing to 65 points nearer to the open. The level effectively means options traders see a 65% chance that the S&P 500 will fall -- or rise -- by 65% over the next twelve months.
Active trading in the main SPDR S&P 500 ETF (SPY) , however, continues, with the market's biggest passive investment vehicle rising 5.9% to change hands at $262.70 each. The SPDR Dow Jones Industrial Average ETF (DIA) , meanwhile, was last seen 6% higher at $225.00 each.
European markets, too, bounced back from their worst day on record Thursday -- which saw near 10% declines across the board after the European Central Bank kept interest rates on hold and Trump issued a sweeping European travel ban.
Yet volatility, too, gripped stocks on the Continent, with the Stoxx 600 rising by 4.2% in early trading before paring that gain to around 1% over the first hour of the session, only to rise 6.8% higher by mid-day.
In London, Britain's FTSE 100 was marked 4.9% higher as the pound slumped to 1.2563 after yesterday's ECB disappointment, which kept the euro and the U.S. dollar elevated, while Germany's DAX index was marked 6.1% higher in Frankfurt.
Global oil markets were also held onto early Friday gains, amid the worst week for crude since 2008, even as demand concerns -- particularly from a staggering travel sector -- offset the ongoing price and output war between Russia and Saudi Arabia.
Brent crude futures contracts for May delivery, the global benchmark, were last seen $2.18 higher from their Thursday close in New York and trading at $35.40 per barrel, while WTI contracts for April delivery were marked $1.92 higher at $33.44 per barrel.
Overnight in Asia, Japan's Nikkei 225 tumbled 6.08% to peg the benchmark at 17,431.05 points, the lowest since early 2017, but managed to reverse some earlier lows after the Bank of Japan moved to increase its bond purchases by $1.9 billion and offer nearly $1.4 trillion in two-week loan liquidity to the country's banks.
The region-wide MSCI ex-Japan index, meanwhile, was last seen 0.14% lower heading into the final hours of trading.