JBAXY Julius Baer Group Ltd (PK)

By Joe Wallace and Chong Koh Ping 

U.S. stocks wavered Thursday after data showed that a record number of Americans have sought unemployment benefits in the past week.

The S&P 500 shifted between early gains and losses while the Dow Jones Industrial Average retreated 0.1% after stock-index futuresgave up earlier gains following the Labor Department's report. U.S. stocks on Wednesday had endured their worst start to a new quarter on record.

The coronavirus pandemic's toll on the U.S. economy became more visible Thursday after data showed that 6.6 million people had filed jobless claims last week. That is roughly double the number from two weeks ago. The American labor market has been hit hard as measures to contain the outbreak have sharply restricted business activity in large parts of the economy.

Brent-crude, the global benchmark for oil, jumped 10% to $27.24 a barrel after President Trump said he was confident Saudi Arabia and Russia would resolve their dispute in coming days. Market sentiment was also buoyed by a report that China plans to buy crude for its strategic reserves, analysts said. U.S. crude futures also soared.

"If you zoom out, the conditions are there that there might be some kind of revival of oil policy," said Norbert Ruecker, head of commodities research at Swiss private bank Julius Baer Group. "The circumstances have really changed drastically" since Russia's partnership with the Organization of the Petroleum Exporting Countries fell apart in March, Mr. Ruecker said.

In particular, Saudi Arabia is unlikely to find buyers for much of the new crude oil it plans to produce because of the global economic downturn, he said. A combination of eroding demand and a flood of new supply recently pushed U.S. crude-oil prices close to their lowest level since 2002.

The jump in oil prices lifted shares in U.S. energy producers before the opening bell in New York. Exxon Mobil and Chevron each rose more than 6%. Stocks in European energy majors also advanced, with Royal Dutch Shell up about 10%. Mr. Trump is meeting with the heads of some of the largest U.S. oil companies on Friday to discuss measures to help the industry, The Wall Street Journal reported.

Traders are increasingly optimistic that major producers will intervene in the oil market to bolster prices, according to DNB analyst Helge Andre Martinsen. However, the pandemic's impact on the economy means the oil market will be significantly oversupplied in the coming months regardless of whether producers cut back output, Mr. Martinsen cautioned.

U.S. government bonds rallied. The yield on 10-year Treasury notes slipped to 0.589%, from 0.630% Wednesday. Yields drop when bond prices climb. Gold, which is also considered a haven, climbed almost 1%.

The Federal Reserve on Wednesday changed rules around how banks account for their supersafe assets, easing capital constraints for lenders. The steps were also aimed at preventing trading hiccups in the market for U.S. government bonds, and easing credit flow.

"Investors are once again flocking to the safety of Treasurys," said Colin Low, senior macro analyst at FSMOne.com in Singapore. "The mini-rally seen last week was a typical relief rally that was seen in previous bear markets such as in 2008 and 2000. The economic situation in many markets is going to be uglier, as more data come in."

Some investors also view what appears to be a slowdown in the rate of infection in Italy, the first Western country to suffer a major coronavirus emergency, as a sign that a similar lockdown approach may help elsewhere. New daily infections have fallen from a peak of over 6,500 on March 21, with about 4,800 people testing positive Wednesday. Still, that represented a rise from 4,100 new cases Tuesday, according to the Johns Hopkins University.

"What we're going to see from here on is market movements are going to be dictated by the virus," said Seema Shah, chief strategist at Principal Global Investors.

The decrease in Italian deaths showed there was "a glimmer of light at the end of the tunnel" in the U.S. and other countries, she said. "We still need to see that full peak in infection rates in a number of countries" for global stock markets to recover meaningfully.

The Stoxx Europe 600 index edged up 0.2% Thursday. Asian stock markets ended the day mixed. The benchmark in Japan lost 1.4%, while China's Shanghai Composite rose 1.7%.

The pandemic has infected more than 935,000 people globally and killed more than 47,000. The death toll in the U.S. surpassed 5,100, as confirmed cases climbed to over 215,000. The World Health Organization has warned that the number of infected could top one million in a few days.

"Globally, as a whole, the Covid-19 situation is worsening," said Mr. Low at FSMOne.com, referring to the illness caused by the novel coronavirus.

"Investors are getting more panicky. They are fully aware that corporate earnings and the global economy will be bad for the first and second quarters. But beyond that, there's no visibility on how these numbers will look like in the third and fourth quarter because of the fluidity of the Covid situation," he said.

-- Frances Yoon contributed to this article.

Write to Joe Wallace at Joe.Wallace@wsj.com and Chong Koh Ping at chong.kohping@wsj.com

(END) Dow Jones Newswires

April 02, 2020 09:49 ET (13:49 GMT)

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