Stocks scale fresh peaks on slowing virus, dollar gains

The dollar gained while several U.S. and European equity indexes scaled fresh peaks on Wednesday after China reported another decline in new coronavirus cases and on expectations of Chinese stimulus to counter a slowdown in growth.

Big manufacturing hubs on the Chinese coast are easing curbs on the movement of people and traffic while local governments prod factories to restart production, a return to economic normalcy sought by investors.

China is widely expected to cut its benchmark lending rate on Thursday, according to a survey of traders and analysts, after the country’s central bank lowered the interest rate on medium-term loans earlier this week.

The death toll from the coronavirus climbed above 2,000, but the number of newly reported cases fell for a second day to the lowest since January. That news lifted Asian shares and spurred U.S. and European stocks to new highs.

“The coronavirus is the top headline these days and the growth in new cases, evidently, has slowed,” said Tim Ghriskey, chief investment strategist at Inverness Counsel.

“Perhaps we’ve seen the worst of it, at least in terms of the growth rate of new cases,” he said, noting there are signs of workers heading back to factories.

IHS Markit said in a research note that it expects the impact on the global economy to be limited, reducing growth by 0.1% in 2020.

The S&P 500 and Nasdaq composite on Wall Street, along with two pan-regional indexes in Europe climbed to new highs, as did Canada’s benchmark index.

MSCI’s gauge of stocks across the globe gained 0.43%, just shy of a record, while its emerging market index rose 0.70%.

The pan-regional STOXX 600 index in Europe rose 0.83% to a new high. Chipmakers hit by Apple Inc’s coronavirus-related revenue warning led a broad rally, with Dialog Semiconductor, STMicroelectronics and AMS AG among the day’s top performers.

The Dow Jones Industrial Average rose 115.84 points, or 0.4%, to 29,348.03. The S&P 500 gained 15.86 points, or 0.47%, to 3,386.15 and the Nasdaq Composite added 84.44 points, or 0.87%, to 9,817.18.

Technology stocks, which are sensitive to news related to China’s growth, gained 1.09%, the most after energy among the 11 S&P sectors.

Overnight, MSCI’s index of Asian shares outside Japan rose 0.5%. Japan’s Nikkei benchmark gained almost 1%, helped by the retreat of the Japanese yen.

Stocks on Wall Street held gains after minutes of the U.S. Federal Reserve’s meeting last month showed policymakers were cautiously optimistic they could hold rates steady this year, even as they acknowledged risks posed by the coronavirus.

The dollar climbed to near a three-year high against a basket of other currencies and the safe-haven yen sank to a nine-month low on the news of an apparent decline in the infection rate for the coronavirus and strong U.S. data.

U.S. homebuilding fell less than expected in January while permits surged to a near 13-year high, pointing to sustained housing market strength that could help keep the longest economic expansion in American history on track.

The dollar index rose 0.15%, with the euro up 0.17% to $1.0809.

The yen weakened 1.23% versus the greenback to 111.26 per dollar.

Crude prices rose more than 2% as demand worries eased with the slowing of coronavirus cases in China and supply curtailed by a U.S. move to cut more Venezuelan crude from the market.

Brent advanced $1.37 to settle at $59.12 a barrel. The global benchmark is up nearly 10% since falling last week to its lowest this year. U.S. oil gained $1.24 to settle at $53.29 a barrel.

U.S. Treasury yields edged higher as expectations China will take more steps to bolster its economy boosted risk taking, and after American economic data beat economists’ expectations.

Edward Park, chief investment officer at Brooks Macdonald, cited President Xi Jinping’s latest commitment to meeting 2020 growth targets.

“This in itself implies there will be more fiscal and monetary stimulus,” Park said. “That’s the real carrot for markets today.”

Benchmark 10-year U.S. Treasury notes last fell 3/32 in price to yield 1.5661%.

Gold rose, holding above $1,600 per ounce, on safe-haven buying from investors seeking a hedge against a bigger economic impact from the coronavirus.

U.S. gold futures settled 0.5% higher at $1,611.80 an ounce.