NEW YORK – The dollar strengthened and a gauge of global stocks jumped on Monday, lifted by an unexpected rebound in US manufacturing that helped temper fears that caused stocks overnight in Asia to plunge on the potential impact of the coronavirus in China.
Gold fell one percent, retreating from a four-week high, as China’s efforts to protect its economy from the virus and the injection of 1.2 trillion yuan ($174 billion) worth of liquidity into the markets helped stem inflows into safe-haven assets.
Bond yields rose, while the Japanese yen and Swiss franc retreated as risk sentiment improved despite a rising infection rate and death toll from the outbreak.
Deaths rose to 361 as of Sunday, up 57 from the previous day, China’s National Health Commission said. All deaths have occurred in China, with the exception of a Chinese man who died in the Philippines after traveling from Wuhan, the epicenter of the outbreak.
Oil prices fell about three percent, however, on concerns crude demand from China will take a hit, though the possibility of deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies offered some price support.
Shares in China plunged during the first day of trading since China closed equity, currency and bond markets on Jan. 23 for the Lunar New Year, a break that was extended by the government because of the coronavirus.
The Shanghai Composite index fell 7.7 percent, slicing $420 billion in value from the benchmark, and the yuan opened at its weakest level this year, sliding past seven per dollar.
Japan’s Nikkei dropped one percent to the lowest since November and Australia’s benchmark index fell 1.3 percent.
Shares edged higher in Europe on relief the UK finally exited the European Union, while US stocks advanced as data showed factory activity unexpectedly rebounded in January after contracting for five straight months amid a surge in new orders.
The Institute for Supply Management (ISM) said its index of US manufacturing rose to 50.9 last month, the highest since July, from an upwardly revised 47.8 in December.
A reading above 50 indicates expansion in the manufacturing sector, which accounts for 11 percent of the US economy.
The Dow Jones Industrial Average rose 143.78 points, or 0.51 percent, to 28,399.81. The S&P 500 gained 23.4 points, or 0.73 percent, to 3,248.92 and the Nasdaq Composite added 122.47 points, or 1.34 percent, to 9,273.40.
Oil prices fell. Brent crude fell $2.17 to settle at $54.45 a barrel, while US West Texas Intermediate crude fell $1.45 to settle at $50.11 a barrel. Both the global and US benchmarks traded at lows last seen in January 2019.
Spot gold, which posted its best month in five in January, slid 0.85 percent to $1,576.30 an ounce. US gold futures settled 0.3 percent lower at $1,582.40. (Reuters)
