Stocks Are Soaring. China’s Central Bank Is Boosting Confidence.
The stock market was getting a double booster Tuesday. The Chinese central bank has moved to loosen monetary policy, while fears around the Omicron Covid-19 variant are easing.
Futures for the
Dow Jones Industrial Average
indicated an open 349 points or 1% higher, building on a 646 point rally Monday when the index closed at 35,227. Futures for the
gained 1.3%, with the technology-stock-heavy
on track to surge 1.8%.
“A Chinese RRR [reserve ratio requirement] cut, promises of further support for the economy and hey, presto, the mood is lifted, as if by magic,” wrote Societe Generale’s Kit Juckes.
Monday, the People’s Bank of China said it will reduce the percentage of cash banks are required to reserve to 8.4% from 8.9%. That will free up almost $200 billion for lending. China is trying to combat a slowing domestic economy, though the move boosts markets in other geographies.
The move also counteracts policy from other central banks around the globe. The Federal Reserve is shifting to a policy that would lift short-term interest rates and long-term bond yields, while the European Central Bank could hike interest rates in 2022.
Plus, it’s looking unlikely that countries around the globe will have to institute new lockdowns on account of the Omicron variant. Not only has news come out that the variant may not cause severe illness, but
(ticker: GSK) said Tuesday that its Covid-19 antibody treatment was effective against Omicron.
Overseas, Hong Kong’s
Hang Seng Index
jumped 2.7% and the pan-European
The mood also lifted oil prices, which have been under intense pressure since Black Friday amid fears that demand could shrivel up if the spreading Omicron variant caused a new wave of widespread lockdowns.
Futures contracts West Texas Intermediate crude rose more than 2% to above $71 a barrel.
Here are six stocks on the move Tuesday:
(BABA) was up near 5% in the premarket, after a 10.4% rally Monday. Shares in the Chinese e-commerce giant have been under pressure recently after poor quarterly results and amid wider regulatory fears about U.S.-listed Chinese companies.
(NVDA) rose 3% in the premarket, with the maker of graphics processing units set to pare losses from a near 10% slide across the last five days.
(MRNA) was up near 3% in the premarket. The president of the Covid-19 vaccine maker said in a media appearance over the weekend that he saw a “real risk that we’re going to see a decrease in effectiveness of the vaccines” due to Omicron. Moderna stock dropped 13.5% Monday.
(MDB) stock gained 21% after the company reported a loss of 11 cents a share, better than the expected loss of 38 cents a share, on sales of $227 million, which were above expectations for $205 million.