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Oil skids on oversupply fears, stocks jump on virus slowdown

FILE PHOTO: A pump jack operates in front of a drilling rig at sunset in an oil field in Texas

By Swati Pandey

SYDNEY (Reuters) – Oil prices skidded on Monday after Saudi-Russian negotiations to cut output were delayed, keeping oversupply concerns alive, while stocks jumped as investors were encouraged by a slowdown in coronavirus-related deaths and new cases.

In currency markets, sterling fell 0.4% early in Asia after British Prime Minister Boris Johnson was admitted to hospital following persistent coronavirus symptoms 10 days after testing positive for the virus.

Brent crude fell as much as $4 after Saudi Arabia and Russia postponed their meeting, initially scheduled for Monday, to Thursday even as the virus pandemic pummels demand.

Equity investors, however, took solace as the death toll from the coronavirus slowed across major European nations including France and Italy.

“With a very light calendar globally today, there is enough momentum to keep the equity rally running through the course of the day and also into European time,” said Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA.

“All bets are off after that although I could see a couple of days of positive sentiment ahead, especially if those mortality rates keep falling.”

U.S. stock futures rose 3.2% during Asian trading after U.S. President Donald Trump expressed hope the country was seeing a “levelling off” of the coronavirus crisis.

Futures for London’s FTSE were up 1.7% while those for Eurostoxx 50 gained 2.6%.

In Asia, Australia’s benchmark index rose 3.3%, Japan’s Nikkei added 2.4% after a slow start while South Korea’s KOSPI index climbed 2.1%. Hong Kong’s Hang Seng index was 0.9% higher.

That sent MSCI’s broadest index of Asian shares outside of Japan up almost 1%, on track for its best performance in a week.

Markets in mainland China were closed for a public holiday.

Worryingly, the number of new coronavirus cases jumped in China on Sunday while the number of asymptomatic cases surged too as Beijing continued to struggle to extinguish the outbreak despite drastic containment efforts.

“Focus in markets will now turn to the path out of lockdown and to what extent containment measures can be lifted without risking a second wave of infections,” National Australia Bank analyst Tapas Strickland wrote in a note.

“Key to a strong rebound in China will be the ongoing lifting of containment measures with Wuhan – the epicentre of the outbreak – set to lift containment measures on April 8.”

Strickland, however, noted many in China were still subject to social distancing and isolation restrictions to prevent a resurgence in infections.

The pandemic has claimed more than 68,000 lives and infected over a million people globally. The United States has the highest number of reported cases, at over 300,000.

Concerns about heavy damage to the global economy have pushed investors into the perceived safety of government bonds where yields are at or near all-time lows.

Elsewhere in currencies, the dollar gained 0.4% against the yen to 108.93..

The euro was barely moved at $1.0810 while the risk sensitive Australian dollar was up 0.3% at $0.6014. The pound was last down 0.2% at $1.2238.

In commodities, Brent crude futures was down nearly 3%, or $1, at $31.14 a barrel while U.S. crude slipped 4.4%, or $1.24, to $27.09.

Spot gold added 0.2% to $1,619.1 an ounce.

(Editing by Sam Holmes and Himani Sarkar)

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