China tariff cut buoys stocks as investors look beyond virus

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European stocks shrug off coronavirus worries to hit record highs, with robust earnings reports among the positives for investors

Bond yields also rose. The 10-year U.S. Treasuries yield climbed to 1.672% US10YT=RR from a five-month low touched on Friday. Euro zone bond yields told a similar story, with German bund yields DE10YT=RR climbing to their highest in almost two weeks.“Over the last few weeks, central banks came in and said they are ready to support the market whenever there is a weakness,” said Didier Anthamatten, a portfolio manager at Unigestion. “Equity investors are basking in the ocean of liquidity.

Statistics from China indicate that about 2% of people infected with the new virus have died, suggesting it may be deadlier than seasonal flu but less deadly than SARS, another reason that investors remain relatively calm. Traders also cited vague rumors of a possible vaccine for the coronavirus as a trigger for Wednesday’s stock rally, even though the World Health Organization has played down media reports of “breakthrough” drugs.

“The coronavirus is continuing to spread so we need to remain cautious. But markets now appear to think that there will be a quick economic recovery after a short-term slump,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

 

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It's being done because they can't afford to keep the tariffs on any more. It's not a good sign.

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