U.S. stock index futures rose, retracing about half of the previous day’s tumble, after Joe Biden’s surprise comeback in the race for the Democratic nomination became the latest development to whip up swings in extremely volatile markets.
S&P 500 Index futures expiring in March rose 1.1% as of 1:52 p.m. in Tokyo, erasing a loss of as much as 0.7%, after Biden scored wins in eight states, while Bernie Sanders won the biggest prize of the Super Tuesday primaries with a victory in California. Futures on the Nasdaq 100 Index and those on the Dow Jones Industrial Average both gained more than 1.2%.
“The market looks at the outcome of Joe Biden posting a strong showing this Super Tuesday as preferential,” Jerry Braakman, chief investment officer of First American Trust, in Santa Ana, California, said by phone. “Biden would be a less severe change for markets that already have enough to worry about, with all these external shocks.”
Biden scored wins in Virginia, North Carolina, Arkansas, Oklahoma, Tennessee, Alabama and Minnesota. And in one of the biggest upsets of the night, he won Massachusetts, delivering symbolic blows to Sanders, who had been expected to win there, and to the candidacy of the state’s senator, Elizabeth Warren.
“Anything that demonstrates that socialism is less popular than Sanders suggests and reduces the risk of an extreme shift in both our attitudes towards businesses and the role of government in our society is a relief,” said Jason Browne, president of Alexis Investment Partners. “Investing is always a long-term commitment that requires faith in the future. This is especially true when current earnings are threatened by something like coronavirus.”
On Tuesday, the S&P 500 fell for the eighth time in nine days following the Federal Reserve’s 50 basis-point cut of its benchmark interest rate. Fed chair Jerome Powell said during a press conference that the U.S. economy remains strong but the virus outbreak will weigh on activity “for some time.”
Asian stocks were resilient Wednesday amid assurances from central banks that liquidity will be provided to counter the impact from the coronavirus outbreak. Bank Indonesia said it is ready to intervene in currency and bond markets after the Fed’s emergency rate cut. India’s central bank governor said he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed.
“Expect a lot of volatility from here though as coronavirus cases continue to pop up until we get clear evidence that the number of new cases is peaking,” said Shane Oliver, a global investment strategist at AMP Capital Investors Ltd. in Sydney.
— With assistance by Abhishek Vishnoi
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