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Global equity markets rebounded in a broad rally on Tuesday and some safe-haven assets lost a bit of their appeal as investors took a less pessimistic view of the potential economic fallout from China’s coronavirus outbreak.

Gold fell and the Japanese yen eased against the dollar, but risk aversion in currency markets persisted, with the Australian dollar leading losers and the greenback strengthening to an eight-week high against a basket of six rivals.

Canada’s main stock index rose on Tuesday, following a steep sell-off in the previous session, helped by gains in energy stocks which got a boost from higher oil prices.

The main index posted its worst day in nearly four months on Monday as the coronavirus outbreak in China raised growth concerns.

The energy sector climbed 0.5 per cent as oil prices steadied after a five-day losing streak.

The healthcare sector rose 4.4 per cent, the most among nine major sectors trading higher.

The top percentage gainer on the TSX was Canopy Growth Corp, which jumped about 11 per cent, after RBC upgraded the stock to “outperform.” Cronos Group and Aurora Cannabis Inc climbed at least 4.8 per cent.

The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 58.36 points, or 0.33 per cent, at 17,500.88.

The materials sector, which includes precious and base metals miners and fertilizer companies, lost 1.2 per cent.

In a possible warning of a future weak economy, strong gains in Treasuries this week led key parts of the U.S. yield curve to reinvert, a reliable indicator in the past that a recession in the United States will follow in a year or two.

Gains in technology and financial shares led Wall Street to recoup some losses from Monday’s selloff, the worst rout in about four months that was sparked by the coronavirus outbreak and worries over its near-term impact on growth.

Major European and U.S. stock indexes rebounded around 1 per cent as President Xi Jinping said China was sure of defeating a “devil” coronavirus that has killed 106 people.

The World Health Organization’s director-general said he is confident in China’s ability to control and contain the spread of a new coronavirus, China’s Ministry of Foreign Affairs said.

Chinese markets will remain closed until next week, but a 0.5 per cent overnight drop in Tokyo’s Nikkei was more modest than Monday’s thumping. Other Asian markets that were open rallied.

“History shows us as we look back at several different examples that these viral outbreaks tend to be short lived,” said Candice Bangsund, a global asset allocation portfolio manager at Fiera Capital in Montreal.

While markets are likely to gyrate in the short term, the global economy will resume the improving growth it started to exhibit late last year, Bangsund said.

“The economy could be ripe for a sharp snapback or a V-shaped recovery once we find out when this is contained and when the outbreak is indeed brought under control,” she said. “We maintain the global economy will come back to life.”

MSCI’s gauge of stocks across the globe gained 0.79 per cent, while its emerging market index lost 0.05 per cent.

Shares on Wall Street also surged. The Dow Jones Industrial Average rose 186.23 points, or 0.65 per cent, to 28,722.03, the S&P 500 gained 32.59 points, or 1.00 per cent, to 3,276.22 and the Nasdaq Composite added 130.37 points, or 1.43 per cent, to 9,269.68.

Oil futures edged up after falling for five days following the recovery in equities and talk that Organization of the Petroleum Exporting Countries and its allies might tighten the market amid fears the coronavirus could weigh on oil demand.

Brent futures settled up 19 cents at $59.51 a barrel, while U.S. West Texas Intermediate (WTI) crude settled up 34 cents at $53.48.

The yield on the benchmark 10-year U.S. Treasury note bounced off three-month lows after a key part of the yield curve briefly inverted for the first time since October.

The yield fell as low as 1.57 per cent overnight, the lowest since Oct. 10, before the 10-year note fell 13/32 in price to lift its yield to 1.6476 per cent.

An inverted curve, when longer-dated yields fall below shorter-maturity ones, has been a fairly reliable signal that a U.S. recession will follow one to two years later.

Euro zone government bond yields bounced off three-month lows to rise for the first time in over a week after U.S. consumer confidence exceeded expectations to hit its highest level since August.

Traders awaited the outcome of a two-day meeting of Federal Reserve policymakers, which started on Tuesday. The market consensus is that the central bank will keep interest rates unchanged at between 1.5 per cent and 1.75 per cent.

The dollar index rose 0.06 per cent, with the euro down 0.02 per cent to $1.1014. The yen weakened 0.22 per cent versus the greenback at 109.14 per dollar.

U.S. gold futures settled down 0.5 per cent at $1,569.8 an ounce.


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