(Adds oil settlement prices)
By Herbert Lash
NEW YORK, June 15 (Reuters) - A gauge of global equities
rebounded on Monday after the Federal Reserve widened its
program of buying corporate debt, while crude oil rebounded too
on signs fuel demand is recovering and as investors grapple with
how to assess the economic reopening.
Stocks jumped after the Fed said its secondary market
corporate credit facility would now include an indexing approach
that would account for all U.S. corporate debt that satisfied
minimum rating, maximum maturity and other criteria.
The wider program starts on Tuesday, the New York Fed said.
The Fed and other major central banks have sparked a rapid
recovery in equity markets from a steep plunge in March by
enacting a number of fiscal and economic stimulus programs, but
investors have been uncertain about the economic recovery.
Fears of a second wave of COVID-19 infections had earlier
rocked world markets, knocking down oil prices and major equity
indices by more than 2% on Wall Street and Europe, and even more
overnight in Asia.
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.20% while the pan-European STOXX 600 index .STOXX
closed down 0.27%.
Overnight in Asia, Japan's Nikkei .N225 fell 3.5% and
South Korean shares .KS11 tumbled 4.8%.
On Wall Street, the Dow Jones Industrial Average .DJI rose
212.56 points, or 0.83%, to 25,818.1. The S&P 500 .SPX gained
30.7 points, or 1.01%, to 3,072.01 and the Nasdaq Composite
.IXIC added 148.97 points, or 1.55%, to 9,737.77.
Investors were spooked after China re-introduced
restrictions in some areas after Beijing reported its biggest
cluster of new infections since February, and new cases and
hospitalizations in record numbers also swept through more U.S.
states, including Florida and Texas. Data showed factories in China stepped up production for a
second straight month in May, giving investors hope, but also
showed sustained contractions in retail sales and investment,
suggesting many sectors were still struggling. News elsewhere also was discouraging. Germany's Economy
Ministry said economic output will fall further in the second
quarter than in the first, and it warned the recovery later this
year and beyond would be sluggish. "Markets are pricing a too-optimistic recovery, in my
opinion, and there could be a reality check coming rather sooner
than later," said Stephane Ekolo, an equity strategist at TFS
Derivatives in London.
Crude oil cut losses and turned higher on signs members of
the Organization of the Petroleum Exporting countries and allies
were complying with a production cut, and on signs of rising
fuel demand.
Prices rebounded after the energy minister of the United
Arab Emirates voiced confidence that OPEC+ countries with poor
compliance to agreed cuts would meet their commitments and
reported signs oil demand was picking up. "That seemed to take away some of the market's negativity,"
"It's fear about the coronavirus versus the reality of
what's happening on the ground," said Phil Flynn, senior analyst
at Price Futures Group.
U.S. crude future CLc1 rose 86 cents to settle at $37.12 a
barrel, while Brent futures LCOc1 settled up 99 cents at
$39.72 a barrel.
U.S. Treasury yields rebounded on the Fed announcement, as
investors set aside concerns over the spread of the coronavirus
that dented risk appetite and boosted demand for safe-haven
bonds.
Benchmark 10-year notes US10YT=RR rose 0.3 basis point to
yield 0.7002%.
Euro zone bond yields edged down as investors bought safer
assets such as government bonds.
Germany's 10-year bond yield DE10YT=RR earlier was near a
three-week lows at -0.45%.
The dollar fell against a basket of trading currencies.
The dollar index =USD fell 0.485%, with the euro EUR= up
0.56% to $1.1317. The Japanese yen JPY= was flat versus the
greenback at 107.36 per dollar.
"The market was pricing in a V-shape recovery. This can't be
the case if there is indeed a second wave, the best scenario is
U-shaped", said Steven Leung, executive director for
institutional sales at Uob Kay Hian.
Worldwide coronavirus cases have crossed 7.86 million with
430,501 deaths, according to a Reuters tally.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Asset performance vs outbreak https://tmsnrt.rs/2YF3T1T
Stocks and oil versus COVID-19 cases https://tmsnrt.rs/3cXWNdO
GRAPHIC-World FX rates http://tmsnrt.rs/2egbfVh
GRAPHIC-MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
GRAPHIC-Emerging markets http://tmsnrt.rs/2ihRugV
GRAPHIC-Global assets in 2020 http://tmsnrt.rs/2jvdmXl
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>