Stocks Rally on Hopes of Reopening Global Economy

2020-04-27

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WASHINGTON - Global stocks rallied on Monday, showing investors optimism about the gradual reopening of the global economy. But the oil market suffered further losses.

Major U.S. market indexes ended in positive territory when trading closed. The Dow Jones Industrial Average was up 1.5%, or almost 359 points, to end at 24,133.78.

The S&P 500 closed 1.47% higher, or nearly 42 points, at 2,878. The Nasdaq was up 1.1%, or 96 points, to close at 8,730.

European markets reflected similar optimism. London's FTSE 100 was up 1.6%, France's CAC 40 was up more than 2.5% and Germany's DAX rose 3.1%.

All of Asia's indexes made significant gains Monday, led by Tokyo's benchmark Nikkei index, which finished 2.7% higher after Japan's central bank announced it was buying billions of dollars in government bonds and corporate debt to revive an economy shattered by the coronavirus pandemic.

Oil prices fall

But oil prices continued a downward spiral amid the continued glut of oil in the world market and shortage of places to store the crude. Tankers filled with oil are floating in the ocean with nowhere to go. The glut is a result of a sharp drop in demand as most of the world came to a virtual standstill because of the stay-at-home policies imposed to fight the coronavirus pandemic.

Brent Crude Oil, an international benchmark, was down 6.2% Monday to end at $20.11 a barrel, and West Texas Intermediate was down more than 23% to trade at $13.

Monday's loss follows a 32.3% decline for all of last week - the biggest oil price fall on record. A week ago, the May contract ended negative for the first time in the history of the energy sector.

Major oil producers, the OPEC cartel and Russia, have agreed to cut production starting May 1 for two months. The 23 members of OPEC and its allies agreed earlier this month to reduce production by 9.7 million barrels a day in May and June, followed by smaller periodic cuts until 2022.

Natural gas was up Monday, but according to the Russian Federal Customs Service, the revenues from natural gas exports in state-run Gazprom plummeted to $5 billion in January and February, a drop of more than 50% compared to last year.

Market analysts expect the historic drop in energy prices to have a long-term effect on the economy.

The transportation industry, especially airline companies, are already feeling the pain. Major world airlines all but halted passenger traffic around the world. Germany's Lufthansa announced some permanent cuts, British Airways warned it may do the same, and some companies are putting employees on temporary furloughs for now.