European markets surge as investors look for silver linings amid the pandemic.
Global markets rose broadly on Monday on continuing hopes that the world’s economy will gradually emerge from the coronavirus outbreak.
European markets jumped about 2 percent in early trading following more moderate gains in Asia. Oil prices also rose on futures markets, while prices of longer-term U.S. Treasury bonds fell, both signs of investor optimism. Futures markets were predicting Wall Street would open about 1 percent higher.
Investors were looking for silver linings as the world grapples with lockdowns and other restrictions. Japan released economic figures on Monday that showed the world’s No. 3 economy formally fell into recession, but Tokyo has begun easing some of its containment efforts. On Sunday, Jerome H. Powell, the Federal Reserve chair, suggested that a full American rebound from virus-induced lockdowns could take until the end of 2021.
The Nikkei 225 index in Japan, the Hang Seng index in Hong Kong and South Korea’s Kospi all rose 0.5 percent. Mainland China’s Shanghai Composite index gained 0.2 percent.
The FTSE 100 index in London and the CAC 40 index in Paris both rose 2.1 percent in early trading. In Germany, the DAX was up 2.3 percent.
Japan fell into a recession for the first time since 2015, as its already weakened economy was dragged down by the coronavirus’s impact on businesses at home and abroad.
The world’s third-largest economy after the United States and China shrank by an annualized rate of 3.4 percent in the first three months of the year, the country’s government said on Monday.
That makes it the largest economy to officially enter a recession, often defined as two consecutive quarters of negative growth, in the coronavirus era. Other major economies around the world are set to follow, joining Japan as well as Germany and France in recession, as efforts to contain the outbreak ripple around the globe. The experiences of China, where the outbreak first emerged in December and January, suggest recovery will be long and difficult.
“The economy entered the coronavirus shock in a very weak position,” said Izumi Devalier, chief Japan economist at Bank of America Merrill Lynch, but “the real big ugly stuff is going to happen in the April, June print. It’s going to be three quarters of very negative growth.”
Apple plans to reopen several stores this week in the United States, Canada and Italy, another sign of the gradual return to business across the world.
In March, Apple closed more than 450 of its stores — nearly every location outside of China — to combat the spread of the coronavirus. The company recently started to reopen shops in South Korea, Australia and Austria.
Now Apple is planning to add another 25 stores in the United States, 12 in Canada and 10 in Italy to its list of reopenings this week. The American stores are in California, Florida, Oklahoma, Hawaii, Colorado and Washington state, though some stores in those states will remain closed. Likewise, Apple is keeping 17 stores in Canada and seven stores in Italy closed.
Apple has set limits on the number of people inside its stores and requires social distancing. Apple Store employees are checking the temperatures of their colleagues and customers at the door and requiring everyone to wear face masks. Customers who don’t have a mask are given one.
Executives of J.C. Penney received a bankruptcy judge’s approval on Saturday to spend up to $500 million while they try to save the company.
A day earlier, the 118-year-old department store chain, which was an anchor of America’s once-thriving shopping malls but is now drowning in debt, became the third major retail chain to file for bankruptcy protection this month, following J. Crew and the Neiman Marcus Group. It is the biggest corporate casualty of the coronavirus crisis so far, with more than 800 stores and nearly 85,000 employees.
The filing was expected after J.C. Penney failed to make an interest payment on its debt in April to “maximize financial flexibility,” and then skipped another payment earlier this month. The stock of the chain, which is based in Plano, Texas, has traded below $1 a share for most of this year. Its sales have steadily shrunk to $10.7 billion for the year ending Feb. 1, when it posted a net loss of $268 million.
After a court hearing Saturday held by telephone, David R. Jones, a bankruptcy judge in Corpus Christi, Texas, ruled that J.C. Penney executives could continue paying employees who have not been furloughed, as well as key vendors it needs to keep operating.
The company hopes to survive by closing stores and shedding several billion dollars in debt, but its fate remains highly uncertain. Jill Soltau, the chief executive, said in a statement that executives planned to “hit the ground running on Monday.” The judge scheduled another hearing for June 2.
It was a week of downbeat pronouncements and grim economic data that had investors focusing on the dire challenges facing the American economy.
Friday was no exception, and stocks were unsteady for most of the day, after new data showed how devastating the impact of the coronavirus pandemic had been to retail sales.
After a sharp fall early in the day, the S&P 500 rebounded, ending the day with a gain of less than 1 percent.
Still, thanks to back-to-back declines on Tuesday and Wednesday, the index had its sharpest weekly drop since late March, a retreat that stands out after a long stretch in which stock investors seemed willing to look past the deeply negative outlook for the economy and the uncertain path of the coronavirus outbreak.
On Tuesday, the nation’s top expert on infectious diseases, Dr. Anthony S. Fauci, warned lawmakers that an overly rapid reopening of large swathes of the American economy, which had been shuttered in an effort to control the outbreak, could reignite the spread of the virus. His comments drove a sell-off in the stock market, which closed down 2 percent.
Amid it all, a parade of economic reports continued to show a downturn of breathtaking speed and scope.
The wild swings in stock prices that occurred in mid-March were shocking to most investors, but now it’s clear that even the Oracle of Omaha appears to have panicked.
Warren E. Buffett bailed out of his holdings in Goldman Sachs in the first quarter of 2020, selling 84 percent of his stake in the Wall Street bank, according to regulatory filings made Friday by his conglomerate, Berkshire Hathaway. Despite the drastic move, Mr. Buffett hung on to shares of two giant banks with stronger consumer operations, JPMorgan Chase and Wells Fargo.
It was an unusual move for Mr. Buffett, who rarely exits his investments with such abruptness. But it’s clear that the coronavirus crisis has hit his company hard. Berkshire Hathaway reported a $49.7 billion loss during the first quarter, in contrast to a $21.7 billion profit during the same period a year earlier.
Goldman Sachs shares are down more than 30 percent from their peak this year in January at $249.72, but their price has recovered somewhat from the lowest point, reached on March 23, when the stock closed at $134.97.
Marc Hamburg, Berkshire Hathaway’s chief financial officer, did not immediately respond to a request for comment.
Catch up: Here’s what else is happening.
Consumer spending on video games, hardware and accessories surged to a record $10.86 billion in the first quarter of 2020, an increase of 9 percent compared with the same period last year, according to data from the NPD Group. Millions of Americans sought distractions while being ordered to shelter in place. Games such as Animal Crossing: New Horizons, Call of Duty: Modern Warfare and Doom Eternal were top titles, and the Nintendo Switch console was a strong seller.
Reporting was contributed by Ben Dooley, Carlos, Tejada, Jack Nicas, Sapna Maheshwari, Michael Corkery, Matt Phillips, Emily Flitter and Gregory Schmidt.