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Global stocks and US futures rise on coronavirus aid hopes

Investors were encouraged after more steps by the Federal Reserve and other central banks and governments to support credit markets and the economy.

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A currency trader wearing a face mask walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea, Friday, March 20, 2020. Asian stock markets were mostly higher Friday after modest Wall Street gains on hopes government and central bank action can shield the world economy from a looming global recession caused by the coronavirus pandemic. (AP Photo/Lee Jin-man)

A currency trader wearing a face mask walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea, Friday, March 20, 2020. Asian stock markets were mostly higher Friday after modest Wall Street gains on hopes government and central bank action can shield the world economy from a looming global recession caused by the coronavirus pandemic. (AP Photo/Lee Jin-man)

A currency trader wearing a face mask walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea, Friday, March 20, 2020. Asian stock markets were mostly higher Friday after modest Wall Street gains on hopes government and central bank action can shield the world economy from a looming global recession caused by the coronavirus pandemic. (AP Photo/Lee Jin-man)

Global stock markets and US futures have risen amid hopes that government and central bank action can help the world economy endure a looming recession caused by the coronavirus.

European markets were as much as 4% higher and Shanghai, Hong Kong and other Asian markets advanced. Seoul surged 7.4%.

Investors were encouraged after seeing more steps by the US Federal Reserve and other central banks and governments to support credit markets and the economy.

On Wall Street, the future for the benchmark S&P 500 index rose 2% and that for the Dow Jones Industrial Average gained 2.4%.

Stocks turned lower Friday, giving up an early rally, after New York became the latest major state to mandate nearly all workers to stay home to limit the spread of the coronavirus.

The Dow Jones Industrial Average erased an early gain of 444 points and was down 140 points, or 0.7%, in early afternoon trading. The S&P 500 was down 1.4% after being up 1.8% earlier.

Hopes are rising that there will be progress in finding virus treatments and that “a boatload of stimulus by both central banks and governments will put the global economy in position for a U-shaped recovery”, said Edward Moya of Oanda in a report.

HEALTH Coronavirus
(PA Graphics)

On Thursday, the European Central Bank launched a programme to inject money into credit markets by purchasing up to 750 billion euros (£684 billion) in bonds.

The Bank of England cut its key interest rate to a record low of 0.1% and restarted its own programme of money injections into the financial system, while Australia’s central bank cut its benchmark lending rate to 0.25%, and central banks in Taiwan, Indonesia and the Philippines also cut rates.

They are trying to reduce the impact of a global recession that forecasters say looks increasingly likely as the US and other governments tighten travel controls, close businesses and tell consumers and travellers to stay home.

Investors also appeared to be encouraged by reports that China is set to ramp up stimulus spending after the province where the virus emerged in December showed no new infections on Wednesday.

In Asia, the Shanghai Composite Index rose 1.6% to 2,745.62, while Hong Kong’s Hang Seng gained 5.1% to 22,805.07. The Kospi in Seoul advanced 7.4% to 1,566.15, and Australia’s S&P-ASX 200 added 0.7% to 4,816.60 after being up more than 4% at one point.

The US Federal Reserve unveiled measures on Thursday to support money market funds and the borrowing of dollars as investors in markets worldwide hurry to build up dollars and cash as insurance against falling asset prices.

That rush to gather dollars is straining markets, with sellers of even high-quality bonds struggling to find buyers at reasonable prices.

Investors are jumpy due to uncertainty about the size and duration of the impact of the coronavirus and the spreading wave of business shutdowns meant to help contain it.

More than 10,000 people have died, and there are over 244,000 cases worldwide, including nearly 85,000 people who have recovered.

PA