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Stock markets move higher Monday on tentative signs of progress in COVID-19 battle

Stocks jumped in markets around the world Monday after some of the hardest-hit areas offered sparks of hope that the worst of the coronavirus outbreak may be on the horizon.

U.S. stocks climbed more than four per cent in the first few minutes of trading, following up on similar gains in Europe and Asia. In another sign that investors are feeling more optimistic about the economy’s path, the yield on the 10-year Treasury rose toward its first gain in four days.

Canada’s benchmark stock index, the S&P/TSX Composite Index was up by more than 500 points or roughly four per cent in percentage terms.

New coronavirus infections and deaths are showing signs of slowing in Spain and Italy. The centre of the United States’ outbreak, New York, also reported a dip in the number of daily deaths, though authorities warned it’s too early to tell whether it’s just a blip or the start of a trend.

The S&P 500 was up 4.4 per cent early and on pace to erase all of its losses from the prior week, when the government reported a record number of layoffs sweeping the economy. The Dow Jones Industrial Average rose more than 1,000 points or almost five per cent, to 22,038, and the Nasdaq was up 4.3 per cent.

Markets have been waiting anxiously for signs that the rate of new infections may stop accelerating at some point. The explosion of cases has caused businesses around the world to shut down, layoffs to soar and flights to cancel as authorities hope to slow the spread of the virus. The strict measures mean markets are bracing for a sudden, steep recession.

But a peak in new cases would give some clarity on how long the downturn may last and how deep it would be. Until then, markets are grasping at guesses.

“Hundreds of people are passing away each day from the pandemic, but less so than previous days, giving markets hope that the lockdown measures are finally starting to prove effective,” Jeffrey Halley of Oanda said in a commentary.

“Like the rest of the world, financial markets are searching for any slivers of hope,” he said.

The S&P 500 is still down more than 23 per cent since its record set in February, but the losses have been slowing since Washington promised massive amounts of aid to prop up the economy.

Asian and European stocks higher, too

In Japan, the prime minister said Monday that he’s preparing to announce a 108 trillion yen ($1 trillion US) package to bolster the world’s third-largest economy. It would be Japan’s largest-ever package for the economy and nearly twice as much as expected.

Japan’s economy was already shrinking late last year before the outbreak forced the global economy into a protective coma induced by health authorities.

The announcement pushed Japan’s Nikkei 225 index to surge 4.2 per cent. Elsewhere in Asia, South Kora’s Kospi jumped 3.9 per cent, and Hong Kong’s Hang Seng rose 2.2 per cent

In Europe, Germany’s DAX returned 4.9 per cent and France’s CAC 40 jumped 3.8 per cent. The FTSE 100 in London rose 2.4 per cent.

The yield on the 10-year Treasury yield rose to 0.66 per cent from 0.58 per cent late Friday. Yields tend to rise when investors are raising their expectations for economic growth and inflation.

Crude oil fell, giving up some of its huge gains from the prior week when expectations rose that Saudi Arabia and Russia may cut back on some of their production.

Demand for oil has plummeted due to the weakening economy, and any cutback in production would help prop up its price. A meeting between OPEC, Russia and other producers initially planned for Monday, though, was reportedly pushed back to Thursday.

Benchmark U.S. crude fell $1.01 to $27.33 per barrel. Brent crude, the international standard, lost $1.09, or 3.2 per cent, to $33.02 per barrel.

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