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Asian markets rise on better-than-expected China trade data – MarketWatch

Asian shares rose Tuesday although investors were braced for sobering news about how the coronavirus pandemic has hurt global corporate earnings and the Chinese economy, the driver of growth for the region.

Japan’s benchmark Nikkei 225
JP:NIK
added 3.1%. Australia’s S&P/ASX 200
AU:XJO
gained 1.9%, while South Korea’s Kospi
KR:180721
jumped 1.7%. Hong Kong’s Hang Seng
HK:HSI
jumped 1.7% and the Shanghai Composite
CN:SHCOMP
added 1.4%.

Data released Tuesday by China showed that its trade improved in March but was below last year’s levels, and forecasters warned Chinese exporters face another slump as the coronavirus pandemic depresses global demand.

Exports sank 6.6% from a year earlier to $185.1 billion, an improvement over the 17.2% contraction in January and February, customs data showed Tuesday. Imports declined 0.4% to $165.2 billion, recovering from a 4% fall in January and February after Beijing started reopening factories and stores.

Exports to the United States fell 20.8% from last year to $25.2 billion while imports of American goods declined 12.6% to $9.9 billion. China’s politically sensitive trade surplus with the United States was $15.3 billion, accounting for three-quarters of its global surplus of $19.9 billion.

On Wall Street, the S&P 500
US:SPX
fell 1% after cutting early losses by more than half toward the end of the day. The benchmark index surged 12% last week, its best gain since 1974.

The S&P lost 28.19 points to 2,761.63. The Dow Jones Industrial Average
US:DJIA
fell 1.4% to 23,390.77. The Nasdaq
US:COMP
rose 0.5% to 8,192.42. The Russell 2000 index
US:RUT
of smaller company stocks lost 2.8%, to 1,212.04.

Cautious optimism that the outbreak has begun to plateau in some of the worst-hit areas and another big infusion of economic support by the Federal Reserve helped spur last week’s big rally. This week, stocks could be in for more volatility as companies report results for the first quarter, though analysts will be focused primarily on what management teams have to say about what the rest of the year looks like.

Details may be hard to come by, as many companies have ceased giving earnings forecasts because of the uncertainty over when government officials will determine it’s safe to roll back the social distancing and stay-at-home mandates that have all but ground the economy to a halt.

“The companies don’t know what demand is going to be over the next three months or over the next six months,” said Willie Delwiche, investment strategist at Baird.

Bond prices fell. The yield on the 10-year Treasury rose to 0.77% from 0.72% late Monday.

Several major banks, including JPMorgan Chase
US:JPM
, Wells Fargo
US:WFC
and Bank of America
US:BAC
, and big companies, including UnitedHealth Group
US:UNH
, Johnson & Johnson
US:JNJ
and Rite Aid
US:RAD
, are on deck to report results this week.

Analysts predict that earnings for all the companies in the S&P 500 will be down 9% in the first quarter from a year earlier, according to FactSet. That would be the biggest annual decline in earnings for the index since the third quarter of 2009 when earnings slumped nearly 16%.

“Our view is its one big write-off year,” said Keith Lerner, chief market strategist at SunTrust Advisory Services. “The market is going to start thinking more about 2021, 2022. On the other side of this, what does that business look like?”

The closure of businesses and mandates for people to stay home to combat the coronavirus pandemic have forced a record number of Americans out of work and raised the possibility that many businesses could end up bankrupt. That has many investors anticipating what may be the worst recession since the Great Depression.

Oil prices got a brief boost following the decision by OPEC and other oil producers over the weekend to cut production by nearly 10 million barrels a day, or a tenth of global supply, beginning May 1.

Analysts said the cuts were not enough to make up for the void in demand due to business and travel shutdowns due to the coronavirus. But the deal at least helped resolve a price war that took U.S. crude to near $20 per barrel, pummeling U.S. oil and gas producers.

U.S. benchmark crude
US:CLK20
rose 17 cents to $22.58 a barrel in electronic trading on the New York Mercantile Exchange. On Monday, it initially jumped more than $1 but then lost ground, falling 35 cents to $22.41 a barrel. Brent, the international standard
UK:BRNM20
, rose 40 cents to $32.14 a barrel.

The dollar
US:USDJPY
fell to 107.66 Japanese yen from 107.76 yen late Monday.

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