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Stocks rise after Biden win and coronavirus rate cut

Edmund Heaphy
Finance and news reporter
Democratic presidential candidate Joe Biden speaks during a primary election night rally. (Marcio Jose Sanchez/AP)

European stocks climbed on Wednesday as investors continued to assess the impact of Tuesday’s emergency rate cut from the Federal Reserve and former US vice-president Joe Biden’s victories in the Democratic primary.

After a volatile trading session, US stocks closed deep in the red on Tuesday, as markets became anxious about the meaning of the Fed’s unexpected decision — the largest since the financial crisis — in the context of the continued coronavirus outbreak.

“There is some serious trouble brewing, and traders are not aware of what is to come. This is the message that investors took away from the Federal Reserve’s surprise action yesterday,” said Naeem Aslam, the chief market analyst at Avatrade.

There have now been more than 93,000 cases of coronavirus globally, with the numbers growing rapidly in Europe.

The pan-European STOXX 600 index (^STOXX) was up by around 1.3% on Wednesday morning.

The FTSE 100 (^FTSE) climbed by 1.6% in London. Germany’s DAX (^GDAXI) was up by 1.2%, while France’s CAC 40 (^FCHI) was up by around 1.3%.

Futures are pointing to a higher open for US stocks, which are likely to be buoyed by Biden’s slew of victories.

“Joe Biden’s Super Tuesday wins left him in a much stronger position. Bernie Sanders took the big prize of California, but the resurgence for the moderate Biden helped lift market sentiment, sending futures higher,” said Neil Wilson, the chief markets analyst at Markets.com.

S&P 500 futures (ES=F), Dow Jones Industrial Average futures (YM=F) and Nasdaq futures (NQ=F) are all up by around 2%.

The boost to European equities and US futures followed a mixed trading session in Asia.

Two closely watched purchasing managers' indices from Hong Kong and China fell to all-time lows in February, a sign that the country has plunged into deep recession.

China’s SSE Composite Index (^SSEC) climbed by 0.6%, while the Hang Seng (^HSI) was down by around 0.2% in Hong Kong at market close.

Japan’s Nikkei (^N225) closed flat, while the KOSPI Composite Index (^KOSPI) in South Korea, where there have been more than 5,300 cases of coronavirus, closed around 2.2% in the green.