U.S. futures tied to the Dow Jones Industrial Average ticked up 0.8%, suggesting that the gauge may climb for a second consecutive day after the opening bell in New York. That may still leave the blue-chip index down by the most since the three months ended December 2008, when the Dow plummeted almost 20%.
The pan-continental Stoxx Europe 600 rose 2%, putting it on course for its worst quarterly performance in over 17 years. Major Asia-Pacific indexes were mixed by the end of trading, with Japan’s Nikkei 225 down 0.9%, while Hong Kong’s Hang Seng Index climbed 1.9%.
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Investors are taking stock after a tumultuous six weeks that saw a global rout in equities, bonds, commodities and many currencies, leaving some emerging markets at a heightened risk of default. The erosion of value in financial markets was exacerbated by factors including hedge funds’ increased use of computer-driven trading models, big asset managers’ push to divest even the safest assets and hold more cash, and investors urgently unwinding risky bets made with borrowed funds.
On Tuesday, signs of a rebound in the Chinese economy helped calm market sentiment. An official gauge of China’s manufacturing activity rebounded strongly in March as factories resumed work following months of a near-total shutdown, though economists warned that business activity remains far from normal.
“China has shown signs already that its economy may be picking back up. It’s leading the way and showing that the same could be achieved in other major economies if the virus is kept under control,” said Lee Hardman, a currency analyst at MUFG Bank in London. “Equity markets have stabilized over the last week in response to the powerful policy actions from central banks and governments.”
The containment measures in some parts of Europe may also be helping slow the spread of the virus, Mr. Hardman said. Meanwhile, the global economy is headed for a sharp contraction in the first half of the year, he cautioned.
“The data still paints a bleak picture,” Mr. Hardman said. “The hope is that in the second half of the year, the virus may be contained and it can recover. If the disruption continues in the back end of the year, that’s a different story.”
Oil prices rebounded Tuesday after hitting multiyear lows at the start of the week. The main U.S. crude-futures gauge rallied 6% to $21.32 a barrel, after settling at an 18-year low Monday. The index has lost almost two-thirds of its value this year. Brent crude, the global oil benchmark, rose 3.2%.
The yield on the 10-year U.S. Treasury note rose to 0.710%, from 0.667% Monday, signaling an increase in investors’ risk appetite as they left the perceived safety of government bonds. Yields move inversely to prices.
Many investors are in a wait-and-see mode, as the U.S., Europe and many Asian countries have rolled out very sizable fiscal stimulus packages, said Tai Hui, chief market strategist for the Asia-Pacific region at J.P. Morgan Asset Management.
“Whether we need more depends on whether the pandemic will force a longer period of social distancing and lockdown,” Mr. Hui said.
The decline in Australian equities helped the S&P/ASX 200 index conclude its worst-ever quarter, dropping more than 24%.
“The challenge has shifted from supply chains and domestic demand to external demand as the U.S. and Europe are going through probably their deepest contraction in history in the next few months,” said Mr. Hui. “That is going to have a knock-on effect on Chinese exports.”