Stocks gain as France is latest to ease lockdown

Monitoring Desk

NEW YORK: European stocks gained Tuesday amid moves to ease coronavirus lockdown measures, although a Wall Street rally petered out following mixed earnings reports and weak consumer data.

France became the latest major European country to begin a gradual return to normality. Unveiling a scaling down of restrictions starting May 11, French Prime Minister Edouard Philippe said Tuesday that shops could reopen on that date although people who are able to work from home should continue to do so.

Philippe warned that “it is a fine line that must be followed. A little too much carelessness, and the epidemic restarts. A little too much caution, and the entire country sinks.” Bourses in Paris, Frankfurt and elsewhere in Europe advanced more than 1 per cent.

“There is a growing sense of optimism the lockdowns have helped contain Covid-19,” said David Madden, market analyst at CMC Markets UK, saying dealers saw this a reason to be “bullish.”

In the US, stocks opened higher, but ended the red following a choppy session as the Conference Board reported that consumer confidence in April plunged to 86.9 in April from 118.8 in March. However, consumers expressed some optimism that the situation will get better, with 40 percent seeing improvement in the next six months.

“The story here seems to be that… people think the current position is so bad that business conditions and the labor market have to (get) better — though not necessarily good — in six months’ time,” Ian Shepherdson of Pantheon Macroeconomics said in an analysis.

Earnings from large companies were a mixed bag, with PepsiCo withdrawing its annual forecast, Merck cutting its forecast and Caterpillar warning of a big profit hit in the second quarter amid uncertainty following deep drops in oil and metal prices.

Crude prices remained under pressure, with US benchmark West Texas Intermediate declining again.

Pessimism was driven in part by the United States Oil Fund — a massive, oil-backed exchange-traded fund — saying it would sell all its holdings in the contract for June delivery.

The move highlighted continued concerns that storage is filling up so that when futures contracts do expire, buyers may find there is little space to put the oil they have purchased.

Prices turned negative for the first time last week, as the May contract was expiring and investors did not want to be left holding the crude. “Oil is back in focus, with the June WTI contract plunging again as the largest US oil ETF plans to offload all of its holdings of the contract in the coming days and instead buy up longer dated contracts,” OANDA analyst Craig Erlam told AFP. (AFP/APP)