* Brent tumbles 12%, then recovers and soars 10%
* European stocks firm after Tuesday’s 3.3% fall
* Wall Street futures higher
* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, April 22 (Reuters) – Oil took markets on another rollercoaster ride on Wednesday as Brent reversed an early 12% crash to 1999 lows and gave battered petro-currencies and equities something buoyant to climb on.
The wildest trading in oil market history continued with benchmark Brent back up more than 10% to over $21 a barrel by the time U.S. traders logged on oblivious to the earlier swallow-dive that took it below $16 a barrel at one point.
With coronavirus lockdowns slashing demand for everything from petrol to jet fuel, and markets still bloated by a turf war being fought by Saudi Arabia and Russia, places to store the excess supply are running out.
U.S. crude prices went negative earlier in the week and Christopher Peel, CIO of Tavistock Wealth, said eight oil supertankers were now moored on the river outside his window in the Portuguese capital Lisbon.
“There is nowhere to put the oil, so it shouldn’t come as any surprise to anyone that the front months (oil price contracts) are getting decimated,” Peel said, predicting it should be a relatively temporary situation.
As well as the fightback from oil, there was encouragement that Europe’s main stock markets and U.S. markets were moving higher after a poor close in New York on Tuesday and a mixed day for Asia.
Focus was on whether European Union leaders, who meet on Thursday, will be able to agree more aid to help the region cope with the coronavirus outbreak. Recent days have seen a blizzard of fresh stimulus announced in other economies.
The pan-European STOXX 600 index and Wall Street main markets were up around 2%, after both went tumbling more than 3% on Tuesday following the collapse in oil prices.
Italian shares gained a more modest 1.3% and the government’s bond yields began to climb again as worries remained about the country’s eyewatering debt levels.
There had been initial relief after Prime Minister Giuseppe Conte said Italy, one of the countries hit hardest by the pandemic, could start pulling out of strict stay-at-home orders from May 4, and after it breezed through a major debt sale on Tuesday.
But it may take European Union countries until the summer or even longer to agree on how exactly to finance an economic recovery from the coronavirus pandemic as major disagreements persist, an official with the bloc told Reuters on Wednesday.
Wealthy, fiscally conservative countries like Germany, Austria, Denmark, Sweden and the Netherlands have rejected calls from the bloc’s ailing southern economies – led by Italy, France and Spain – to sell joint “coronabonds” to restart growth.
“My hope is to make progress in June, July,” said the EU official, who is involved in preparing the leaders’ summit. But a final deal might take even longer, the official stressed.
Spain’s yields matched Italy with a 16 basis points rise. Germany’s 10-year yield was up a more modest 5 to -0.43% . The five-year U.S. Treasuries yield also rose to 0.35% after hitting a record low of 0.3010% on Tuesday . The 10-year notes yield stood at 0.58%, still near last month’s record lows caused by panic buying.
MAGIC MONEY FORESTS
While a Reuters tally shows there have been more than 2.5 million cases globally of the COVID-19 respiratory disease caused by the new coronavirus, another $500 billion in relief has come through for the U.S. economy, and the governors of half a dozen U.S. states are planning to reopen business.
Restrictions are tentatively being lifted in a host of countries and many more are unveiling stimulus measures. South Africa’s president pledged a $26 billion rescue package on Tuesday for his country’s economy, which was suffering from anaemic growth even before the coronavirus outbreak.
Mexico unveiled a $31 billion package and cut its benchmark rate by 50 basis points, Turkey cut by another 100 basis points while South Korea readied a third supplementary budget and a $32.4 billion fund to prop up its economy.
“If the global economy can reopen in eight weeks or so the damage is done (for equity markets), but the longer-term damage is in the bond markets,” said Tavistock’s Peel, warning of the huge rise in debt levels as countries ramp up aid.
U.S. stock futures had bounced back to be about 1% higher after Tuesday’s falls.
In the currency market, the dollar had levelled out after rising when investors fled oil-linked currencies such as the Norwegian crown, Russian rouble and Canadian dollar .
The safe-haven yen held firm at 107.79 to the dollar while the Swiss franc stood near five-year high against the euro at 1.05255 franc. Norway’s crown and the rouble both recovered though, and the Australian dollar was up 0.8% after a record surge in retail sales last month spurred by panic buying .
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