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U.S. Stocks Set to Open Lower After G7 Offers No Action: Live Updates


Central bankers and political leaders of the United States and other economic powers on Tuesday expressed their resolve to combat economic damage from the coronavirus, but stopped short of promising interest rate cuts or other immediate rescue measures.

The joint statement of solidarity showed that the leaders of the so-called G7 nations, which also includes Britain, Canada, France, Germany, Italy and Japan, are capable of cooperation. But the statement fell short of the more aggressive action that investors have been hoping for and that many economists say is needed to prevent the virus outbreak from undermining global growth. The announcement underlines what a fraught moment this is for the world’s economy. The virus could exact a heavy economic toll in the G7 countries, as it leads to quarantines, shutters factories, and hits investor and consumer confidence.

After central bankers dashed hopes for a coordinated rate cut, European stocks lost some of their gains and futures on Wall Street reversed course and pointed to a downbeat start of trading.

Indexes in Europe remained positive after the announcement from the G7 countries, but lost nearly half their gains. Britain’s FTSE was 1.5 percent higher, and Germany’s DAX 1.7 percent higher.

Investors have been watching for any sign of action from the world’s central banks in battling the economic impact of the coronavirus. In the United States on Monday, the S&P 500 booked its biggest single-day gain since late December 2018, after the news that central bankers would join the conference call with finance ministers, fueling expectations that governments might lower interest rates in tandem.

Stocks in Taiwan led a rally in Asia on Tuesday, with the Taiex index up 1.4 percent. Stocks in the rest of the region were more restrained. In China, the Shanghai Composite Index rose 0.7 percent.

Bond yields fell to new lows on Monday, a tumble that, for the most part, was the result of a giant rush for safety among global investors. It was a sign that investors believed economic growth in the United States and around the world would decelerate quickly.

The global outbreak has caused upheaval in stock markets and disrupted supply chains around the world. But so far, there have been few signs of widespread economic damage, at least in the United States.

Economists say a pandemic could clearly cause a recession in the United States. But for that to happen, the effects would have to spread beyond manufacturing, travel and other sectors directly affected by the disease. The real sign of trouble, said Tara Sinclair, an economist at George Washington University, would be if companies with no direct connection to the virus started reporting a slump in business.

“The key is to watch big macro numbers rather than obsessively watching things tied to virus and supply chains,” Ms. Sinclair said. “If people aren’t getting haircuts anymore, that’s a bad sign.”

A recession is more than just a dip in gross domestic product. As most economists think of it, a recession involves a cycle that feeds on itself: Job cuts lead to less income, which leads to less spending, which leads to more job cuts.

So far, the coronavirus outbreak’s impact on the U.S. economy looks more like that of a hurricane than that of a financial crisis — but that could change quickly.

Some economic policymakers took action on Tuesday to shore up their economies as the impact of the coronavirus begins to threaten global growth.

The Reserve Bank of Australia cut its interest rates to a record low, while Malaysia’s Bank Negara cut its key lending rate for a second time this year.

The International Monetary Fund and the World Bank have also said they are standing by to take action.

Philip Lowe, Australia’s central banker, on Tuesday said the virus outbreak was having a “significant effect” on travel and education sectors. The central bank lowered its rate by one quarter of a percentage point to a new low of 0.5 percent.

Malaysia’s central bank lowered rates by one quarter of a percentage point to 2.5 percent.

Major stock indexes in Australia and Malaysia both rose 0.7 percent.

Some companies have already taken precautions like limiting travel to affected countries or big international conferences. Others have asked employees to stay home because they visited a country with a more serious outbreak.

But with new unexplained cases being reported in the United States — and the first domestic death from the illness reported on Saturday — a growing number of American workers could soon be asked to alter their routines, or just stay home.

Exactly how that affects you will depend on many factors, including the generosity of your employer’s benefits and where you live. U.S. workers are less likely to be covered by a paid sick leave policy than those in other developed countries.

“This can put hourly workers in a bind, and make employees in the U.S. more likely to show up for work when they are sick,” said Joseph Deng, who specializes in employment and compensation law at Baker & McKenzie in Los Angeles.

Will you be paid if you’re told to stay home? This largely depends on your company’s policies, but so far many larger businesses are seeing to it that affected employees get paid, one way or another.

Before Monday’s rally, the S&P 500 had dropped more than 11 percent in a week. That’s its worst weekly decline since the 2008 financial crisis, and a drop that pushed it into what’s known as a correction — a drop of 10 percent or more, representing a psychologically significant marker for investors.

But Monday’s surge meant that the correction lasted only nine days, which, according to Yardeni Research, was the shortest on record in terms of calendar days since 1928, the earliest date for which the research group has published data on the S&P.

The previous two corrections in the S&P 500 were both in 2018, when the market fell 10.2 percent for 13 days ending in February and 19.8 percent for 95 days ending in December.

  • Late on Monday, Hyatt Hotels withdrew its financial forecasts for 2020, in part because of the impact of travel restrictions imposed by companies since the virus outbreak, saying its ability to assess the impact of the virus “continues to be limited because of quickly changing circumstances and uncertain consumer demand for travel.”

  • British Airways canceled 216 flights from London to New York, Italy, France, Germany, Belgium, Austria and Ireland from March 16 to 28. The airline had previously canceled flights to mainland China and reduced service to Italy. Ryanair, the Irish discount airline, canceled a quarter of its flights to and from Italy, from March 17 to April 8.

  • Twitter, which had already closed offices in Japan and South Korea and banned nonessential travel, on Monday encouraged all of its employees in the United States and other countries to work from home. And its chief executive, Jack Dorsey, pulled out of a speaking engagement at South by Southwest, an annual technology conference and music festival scheduled to be held in two weeks in Austin, Tex.

Reporting was contributed by Ben Casselman, Geneva Abdul, Kate Conger, Alexandra Stevenson, Jeanna Smialek, Kevin Granville, Carlos Tejada, and Jack Ewing.



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