European stocks and oil prices recovered Friday on US stimulus hopes, while Asian equities experienced wild swings, with traders closing out a week of carnage for world markets as the coronavirus pandemic fuels fears of a global recession.
After Wall Street’s Dow index dived 10 percent Thursday, its worst session since 1987, Sydney won 4.4 percent and Tokyo tumbled 6.1 percent.
Nearing the half-way mark in Europe, London surged 6.7 percent, Frankfurt rallied 6.2 percent, Paris soared 7.2 percent, Milan won a massive 14.4 percent and Madrid recovered 7.1 percent.
Yet the gains were not enough to overturn a bloodbath Thursday, which saw leading European indices suffer their worst falls for decades.
The Paris CAC 40 dived more than 12 percent Thursday to record its biggest one-day loss since the index was created at the end of 1987.
London’s FTSE 100 and the Frankfurt DAX 30 indices meanwhile had their biggest one-day drops since the late 1980s, with losses of around 10-12 percent.
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By Friday, Europe’s main stock markets, European stocks were on average down about 15 percent over the past week.
“After a wild week on the markets, hopes of a Fed stimulus package are boosting stocks,” said Fiona Cincotta, analyst at City Index trading group.
“The turnaround comes as central banks from US to Australia pump liquidity in the financial markets and as investors become hopeful that US Democrats and Republicans could pass a stimulus package on Friday,” Cincotta added.
Tokyo, which fell as much as 10 percent at one point Friday, ended down 6.1 percent, while Hong Kong shed 1.1-percent lower having plunged around seven percent earlier in the session.
The volatility gripping markets has wiped trillions of dollars off the globe’s combined company valuations in just a few weeks.
“Despite continued uncertainty over the coronavirus spread, some market players with more optimistic outlooks will see current levels as good buying opportunities for medium and long term plays,” said Nick Twidale, at IC Markets.
Oil prices, which have also been ravaged this week, were up more than five percent on Friday.
Still, trading floors remain nervous places following a virtual implosion worldwide.
“In mere weeks, the market has shifted gears from a transitory health scare to a full-blown global recession,” said AxiCorp market strategist Stephen Innes.
“Global supply chains are no longer just ‘disrupted’ but are now in the process of shutting down completely,” he added.
Markets have also been shaken by an oil price war between Saudi Arabia and Russia, compounded by fears that travel restrictions will further dampen energy demand.
On currency markets Friday, the dollar hit a record-high against the Indian rupee. The greenback fought back also against the yen despite the Japanese unit’s haven position.
“Most worryingly, US bond yields rose… when really the situation was ripe for a mass stampede to the US Treasury market driving down yields,” said Jeffrey Halley, senior market analyst at OANDA.
“That suggests two things: One, credit is tightening — a gruesome scenario for business. Two, investors are now moving to the ultimate haven — hoarding cash in boxes under the bed. European stocks”
– Key figures around 1115 GMT –
London – FTSE 100: UP 6.7 percent at 5,587.94 points
Frankfurt – DAX 30: UP 6.2 percent at 9,731.54
Paris – CAC 40: UP 7.2 percent at 4,337.15
Milan – FTSE MIB: UP 14.4 percent at 17,037
EURO STOXX 50: UP 7.3 percent at 2,730.62
Tokyo – Nikkei 225: DOWN 6.1 percent at 17,431.05 (close)
Hong Kong – Hang Seng: DOWN 1.1 percent at 24,032.91 (close)
Shanghai – Composite: DOWN 1.2 percent at 2,887.43 (close)
New York – Dow: DOWN 10.0 percent at 21,200.62 (close)
Dollar/yen: UP at 106.27 yen from 104.79 yen at 2100 GMT
Euro/dollar: DOWN at $1.1156 from $1.1179
Pound/dollar: UP at $1.2582 from $1.2557
Euro/pound: DOWN at 88.66 pence from 88.96 pence
Brent North Sea crude: UP 5.5 percent at $35.06 per barrel
West Texas Intermediate: UP 5.2 percent at $33.13 per barrel
AFP