U.S. Stock Futures Rise With Biden Comeback Adding to Upswing

(Bloomberg) -- U.S. stock index futures rose, indicating a positive start after Tuesday’s tumble, as Joe Biden’s surprise comeback in the race for the Democratic nomination became the latest development to whip up swings in extremely volatile markets.

S&P 500 Index futures expiring in March rose 1.7% as of 9:05 a.m. in London, erasing a loss of as much as 0.7%, after Biden scored wins in nine states, while Bernie Sanders won the biggest prize of the Super Tuesday primaries with a victory in California. Futures on the Nasdaq 100 Index and those on the Dow Jones Industrial Average both gained more than 1.8%.

The contracts pointed to a recovery from losses the previous session, after the 50 basis-point cut by the Federal Reserve failed to ease concerns about an economic downturn.

“Biden is the preferred candidate for the financial markets. The moderate Democrat would ease trade conflicts,” said Thomas Gitzel, the chief economist at VP Bank AG. “A milder tone to major U.S. trading partners would reduce nervousness. But the Democrats have bad odds against Donald Trump.”

Biden, whose campaign had been faltering, scored wins in Virginia, North Carolina, Arkansas, Oklahoma, Tennessee, Alabama and Minnesota. His victories in Texas and Massachusetts were especially painful for Sanders, who had overtaken Biden at the top of polls recently.

“Mr. Biden is fairly centrist as far as Democrats go, and traders should be less worried about him potentially going head-to-head with President Trump, as he is more pro-business than Bernie Sanders,” David Madden, market analyst at CMC Markets UK, wrote in a note.

In Europe, a gauge tracking major shares across the continent rose 0.9%, with miners leading gains among sectors and travel and leisure shares leading losses. A volatile session for Asian stocks saw declines in Australia offset gains in South Korea, while Japan ended little changed. Chinese and Hong Kong shares fluctuated.

On Tuesday, the S&P 500 fell for the eighth time in nine days following the Federal Reserve’s 50 basis-point cut of its benchmark interest rate. Fed chair Jerome Powell said during a press conference that the U.S. economy remains strong, but the virus outbreak will weigh on activity “for some time.”

Asian stocks were resilient Wednesday amid assurances from central banks that liquidity will be provided to counter the impact from the coronavirus outbreak. Bank Indonesia said it’s ready to intervene in currency and bond markets after the Fed’s emergency rate cut. India’s central bank governor said he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed.

“Anything that demonstrates that socialism is less popular than Sanders suggests, and reduces the risk of an extreme shift in both our attitudes towards businesses and the role of government in our society, is a relief,” said Jason Browne, president of Alexis Investment Partners. “Investing is always a long-term commitment that requires faith in the future. This is especially true when current earnings are threatened by something like coronavirus.”

--With assistance from Abhishek Vishnoi, Filipe Pacheco and Jan-Patrick Barnert.

To contact the reporters on this story: Elena Popina in New York at epopina@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Naoto Hosoda, Paul Jarvis

©2020 Bloomberg L.P.