By Herbert Lash and Marc Jones
NEW YORK/LONDON (Reuters) – World stock markets edged higher on Thursday on surging shares of Netflix and Amazon.com as investors anticipated big earnings from the coronavirus-induced slowdowns keeping people at home, while bond yields fell as data reflected record U.S. joblessness.
Equities markets seesawed for most of the session as dire U.S. jobless claims data underscored a deep recession and tamped down investor hopes the economy would soon be back on its feet.
A record 22 million Americans sought unemployment benefits over the past month, with millions more filing claims last week in a stark sign of how deep the economic slump caused by the pandemic will be.
Morgan Stanley <MS.N> Chief Executive James Gorman told shareholders he “can promise” the bank will miss its medium-term financial targets again this quarter, as the lockdowns will continue to upend the global and U.S. economies.
Morgan Stanley posted a 32% fall in quarterly profit and its shares slid 0.3%.
Amazon <AMZN.O> and Netflix <NFLX.O> rose as sweeping stay-at-home orders drove demand for online streaming services and home delivery of goods.
With an “all-clear” nowhere in sight, seven U.S. Northeastern states extended a shutdown to contain the pandemic until May 15, even as President Donald Trump prepared to detail his plan to open businesses in the least-affected states as early as May 1.
The dollar hit a one-week high and U.S. Treasury yields fell for a third session as investors fled to safe-haven assets.
Investors are grappling with whether to be optimistic for when economies pull out of recession or to wait for a coronavirus vaccine and clear signs growth has fully recovered, said Anthony Saglimbene, global market strategist at Ameriprise.
“The stock market is forward-looking and has discounted a lot of some of the really bad economic and earnings numbers that we’re going to get for Q1 and Q2,” Saglimbene said.
“It’s really about ‘When we do reopen, what’s that curve look like? Is it a ‘V,’ is it a ‘U’ or is it a ‘W’?’ Our view is that it’s going to be slow recovery,” he said.
It may take a few years for U.S. economic activity to rebound fully from the severe downturn caused by the coronavirus pandemic, New York Federal Reserve Bank President John Williams said.
MSCI’s gauge of stocks across the globe <.MIWD00000PUS> gained 0.14% and its emerging market stock index lost 0.37%.
On Wall Street, stocks gained. The Dow Jones Industrial Average <.DJI> rose 33.33 points, or 0.14%, to 23,537.68. The S&P 500 <.SPX> gained 16.19 points, or 0.58%, to 2,799.55 and the Nasdaq Composite <.IXIC> added 139.19 points, or 1.66%, to 8,532.36.
European shares rebounded, with the pan-European STOXX 600 index <.STOXX> up 0.58%.
Global benchmark Brent crude rose but West Texas Intermediate, the U.S. benchmark, settled flat, with official data showing U.S. inventories surging to the most on record. Investors had hoped that such a build-up may mean producers have little option but to cut output as the coronavirus outbreak ravages demand.
The Organization of the Petroleum Exporting Countries expects global demand to contract by 6.9 million barrels per day, or 6.9%, in 2020, it said in a monthly report. Last month, OPEC expected a small increase of 60,000 bpd in demand.
Brent crude futures <LCOc1> rose 13 cents to settle at $27.82 a barrel. U.S. WTI <CLc1> settled flat at $19.87 a barrel.
Speculation mounted that the European Central Bank was looking to prevent further stress in the region’s debt markets, where debt-to-GDP looks set to top 150% this year.
“We have had this big wave of big announcements by governments and central banks, and now we need to get into the nitty gritty of how it all works,” said Gilles Moec, AXA Investment Managers chief economist.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> rose 8/32 in price to push their yield down to 0.6173%.
The dollar index <=USD> rose 0.438%, with the euro <EUR=> up 0.02% to $1.0837. The Japanese yen <JPY=> strengthened 0.02% versus the greenback at 107.94 per dollar,
Policymakers are starting to allow stringent lockdowns to ease, and firms are looking to restart. Germany is proposing reopening schools and some retailers starting May 4.
German carmakers Volkswagen <VOWG_p.DE> and Mercedes-Benz <DAIGn.DE> will restart production at some German factories next week and in other countries a week later.
Gold fell after climbing 1.3% as safe-haven demand weakened after U.S. jobless claims rose less than they did a week ago and hopes grew for an easing of coronavirus-led curbs.
U.S. gold futures <GCv1> settled down 0.5% at $1,731.70 an ounce.
(Additional reporting by Tom Westbrook in Singapore and Shadia Nasralla in London; Editing by Bernadette Baum, Jonathan Oatis and Dan Grebler)