Trump call gives markets a record boost

WALL Street ended a brutal week with US stocks recording the biggest one-day jump since 2008 after US President Donald Trump declared the coronavirus a national emergency and unlocked $US50 billion ($A78 billion) towards the fight.

A day after the worst share market slide since the Black Monday crash of 1987, US markets surged almost 10 per cent at the closing bell.

The US markets tracked about 4 per cent higher for most of the day's trade until Mr Trump's announcement more than doubled the enthusiasm of investors.

"I am officially declaring a national emergency, two very big words," Mr Trump said.

The Dow Jones Industrial Average rose 1985 points, or 9.4 per cent, to 23,185, making up most of its eye watering losses from yesterday.

Wall St enjoyed it’s biggest one day jump since 2008. Picture: AP Photo/Mark Lennihan
Wall St enjoyed it’s biggest one day jump since 2008. Picture: AP Photo/Mark Lennihan

The broader S&P 500 jumped 9.3 per cent to 2711.02, while the tech-rich Nasdaq climbed 9.35 per cent to 7874.88.

Mr Trump said the US would step up the purchase of oil reserves, declared a moratorium of federal student-loan interest and revealed a partnership with the private sector to expand testing for the coronavirus.

Google, Walmart, Target, CVS and others will assist health officials with procedures and testing. That helped send blue-chip shares higher.

All the companies that were mentioned during the president's address saw shares rise.

Roche, which has developed a diagnostic tool that can help identify the coronavirus, saw shares rise 13 per cent to close at $US40.30.

Shares in Google's parent Alphabet rose 9 per cent to close at $US1214.27. Mr Trump said Google would be bringing a new pre-screening website online that people can use to check their symptoms and be pointed towards testing locations around the country.

Walmart, Target, CVS, and Walgreens all saw shares jump after Mr Trump revealed they were opening drive-thru testing sites for COVID-19.

Walmart shares closed 9.66 per cent higher to $US114.10, Target shares closed more than 9 per cent higher to $US101.02 and Walgreens was up 12.6 per cent to close at $US46.19.

The market rally came after a turbulent week fuelled by fears that the coronavirus could bring on a global recession.

Investors have been wanting concrete action on an economic relief package to combat the economic impact.

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Traders across the world have had a rollercoaster of a week. Picture: AFP
Traders across the world have had a rollercoaster of a week. Picture: AFP

Speaker Nancy Pelosi said the House would pass a coronavirus relief package that included, free testing for everyone who needs a test, two weeks of guaranteed paid sick leave, increased family leave, higher unemployment benefits, and a bump in Medicaid funding.

She did not say whether the package had the support of Republicans but Treasury Secretary Steven Mnuchin said Mr Trump was "absolutely committed that this will be an entire government effort".

Thursday's drop was the worst for the US market since the Black Monday crash of 1987.

An early surge in buying subsided around midday Friday, then regained momentum in the afternoon.

President Donald Trump declares a national emergency. Picture: AP Photo/Evan Vucci
President Donald Trump declares a national emergency. Picture: AP Photo/Evan Vucci

On Friday morning, US President Donald Trump demanded that the US Federal Reserve lower a key interest rate in response to the coronavirus crisis, a day after the Fed announced it would make up to a massive $US1.5 trillion worth of short-term loans to support credit markets and assure liquidity.

"The Federal Reserve must FINALLY lower the Fed Rate to something comparable to their competitor Central Banks," Mr Trump wrote in a tweet that called out Fed Chair Jerome Powell by name.

"Jay Powell and group are putting us at a decided economic & physiological disadvantage. Should never have been this way. Also, STIMULATE!"

Federal Reserve Chair Jerome Powell. Picture: AP
Federal Reserve Chair Jerome Powell. Picture: AP

Mr Trump also had a message for Congress, which is close to signing off on a stimulus package.

"If you want to get money into the hands of people quickly & efficiently, let them have the full money that they earned, APPROVE A PAYROLL TAX CUT until the end of the year, December 31. Then you are doing something that is really meaningful. Only that will make a big difference!" Mr Trump tweeted.

 

 

 

It came as major indexes in Europe climbed between 4 per cent and 5 per cent a day after one of their worst drops on record.

Bond yields moved broadly higher, a signal some investors were pulling back, at least for now, from seeking less-risky assets.

The yield on the 10-year Treasury note rose to 0.91 per cent from 0.85 per cent late on Thursday.

It had never been below 1 per cent before last week.

The rally follows news that the Trump administration and House Democractic leadership are close to announcing an agreement on a coronavirus aid package aimed at reassuring anxious Americans by providing sick pay, free testing and other resources.

 

Treasury Secretary Steven Mnuchin said Friday morning that negotiations were going very well.

"I think we're very close to getting this done," Mnuchin said, appearing on CNBC.

Ryan Detrick, senior market strategist at LPL Financial, said it appears that the government is inching closer to a stimulus plan that will help cushion the financial impact to people and businesses." We're finally getting that a little late to the party, but it's better to be late to the party then not to come to the party," he said.

US markets have had their worst week since October 2008 during the Global Financial Crisis. Picture: AP
US markets have had their worst week since October 2008 during the Global Financial Crisis. Picture: AP

Even with the early gains, the stock market is on track for its worst week since October 2008, during a global financial crisis.

In just a few weeks, US stocks have wiped out all the gains made during 2019 - one of the best years for the market in decades.

The market's rout intensified this week amid a torrent of cancellations and shutdowns around the globe as governments and businesses attempted to stem the spread of the outbreak.



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