Global Stocks Edge Lower as Oil Prices Jump

Stock markets around the world fell Friday, as oil continued its rebound and fresh data showed the unprecedented impact the coronavirus pandemic is having on economic activity.

U.S. futures edged down, with securities tied to the Dow Jones Industrial Average declining 1.1% as investors awaited March's jobs report, due at 8:30 a.m. ET. In Europe, the pan-continental Stoxx Europe 600 fell 0.8%.

Brent crude, the global gauge of oil prices, rose 7.9% to $32.31. The Organization of the Petroleum Exporting Countries and its allies are planning to discuss Monday reducing oil production by at least 6 million barrels a day, The Wall Street Journal reported Friday.

On Thursday, Brent leapt 21%, marking its largest one-day percentage gain on record, based on data going back to 1988. President Trump said he expected Russia and Saudi Arabia to agree to cut production. Moscow denied talking to the Saudis, but the kingdom's officials said it would consider substantial output cuts if other nations joined the effort.

Luca Paolini, chief strategist at Pictet Asset Management, said Friday's stock declines show the market is skeptical about oil-production cuts. It would take coordinated action from all the major oil producers, including the U.S., to make a lasting difference.

"If there's an agreement for a production cut, I would see that as a positive," he said.

In Europe, economic data out Friday showed the brutal impact the coronavirus is having on economic growth. Purchasing Managers' Indexes for the services sector in the eurozone fell to the lowest level ever.

"Each additional day of shutdown is incredibly painful from an economic perspective," said Ralf Preusser, head of global rates research at Bank of America Merrill Lynch. The market reaction is relatively muted because bad economic prospects in Europe are priced in, even with data at record lows, he said.

Dutch insurance companies were among the biggest losers on the Stoxx Europe 600 after the country's central bank urged them to cut dividends and cancel share buyback plans to withstand the economic impact of the coronavirus. Aegon NV plunged 9.9%, NN Group NV dropped 8.3% and ASR Nederland NV lost 8%.

In U.S. premarket trading, Tesla rose over 13% after it released strong first-quarter production and delivery numbers that showed its operations hadn't been overly disrupted by the coronavirus. The electric vehicle maker said it sent 88,400 cars to customers, beating estimates.

While the coming U.S. unemployment report won't incorporate the full impact of job losses in recent weeks, it is expected to mark the first time since 2010 that employers shed more workers than they added. The Institute for Supply Management's nonmanufacturing survey for last month will also show the impact of social distancing on U.S. service providers.

The yield on the 10-year U.S. Treasury note fell to 0.604%, after settling at 0.624% in the previous session. Bond yields fall as prices rise.

In Asia, major stock indexes were largely flat. The Shanghai Composite Index closed down less than 1%. The People's Bank of China eased monetary policy, indicating that the Chinese economy is still in need of support despite people returning to work. To encourage more lending, it cut reserve ratio requirements for small- and medium-size banks by 1 percentage point and lowered rates for commercial banks' excess reserves to 0.35% from 0.72%.

A record 6.6 million Americans applied for unemployment benefits last week -- double the number two weeks ago -- as the country shut down parts of the economy in an effort to contain the virus.

All eyes are on how long the containment measures rolled out by the U.S. and other countries will last, according to Eddy Loh, a senior investment strategist at Maybank Group Wealth Management.

"The longer the lockdown, the larger the damage. The fear now is the rise of corporate bankruptcies," Mr. Loh said. "We'll be tracking very closely whether the liquidity crisis will become a credit crisis. And the U.S. will be the key driver here."

Despite the relatively modest moves in markets Friday, Kerry Craig, a global market strategist at JP Morgan Asset Management, said he expected the markets to remain choppy.

"A cycle of corporate [earnings] downgrades has yet to come through," he said, adding that consensus expectations weren't yet fully reflecting the impact of the pandemic.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Chong Koh Ping at chong.kohping@wsj.com


  (END) Dow Jones Newswires
  04-03-20 0754ET
  Copyright (c) 2020 Dow Jones & Company, Inc.

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