Left Menu
Development News Edition

GLOBAL MARKETS-World stocks jump to 3-month high as recovery hopes outweigh looming risks

Reuters | Updated: 03-06-2020 12:01 IST | Created: 03-06-2020 12:01 IST
GLOBAL MARKETS-World stocks jump to 3-month high as recovery hopes outweigh looming risks

Global shares vaulted to a near three-month high on Wednesday as hopes of more stimulus and further easing in social restrictions around the world outweighed caution over a host of worries from the coronavirus to growing U.S. civil unrest. Pan-European Euro Stoxx 50 futures were up 1.27% while MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.8%, extending its rally into a fifth straight day to reach a level last seen on March 9.

Japan's Nikkei rose 1.1% to its highest level since late February, while mainland China's CSI300 rose 0.6% to break above its May peak to a 12-week high. South Korea's Kospi gained more than 3%. In those three East Asian countries, where the COVID-19 is relatively contained, the indexes have recovered substantially to be only about 5-6% below this year's peaks.

E-mini futures for the U.S. S&P 500 were up 0.2% in early Wednesday trade, extending the gains so far this week to 1.4%. The tech-heavy Nasdaq index has risen to be just over 2% below February's record peak. "The good times continue to roll in risk markets," Mazen Issa, senior FX strategist at TD Securities, said in a report. "As intense as the rally has been, this is likely set to continue as the breadth of the equity rally has now spread outside the U.S."

MSCI's gauge of stocks across the globe rose 0.3%, hitting a three-month high and extending the gain from its March 23 low to almost 36%. Despite pandemic lockdowns that have pushed many economies into contraction, the global index is down year-to-date less than 8%. There are some signs of recovery in business activity as governments restart their economies.

In China, which managed to quash the outbreak by March, a closely-watched survey of service sector activity recovered to pre-epidemic levels in May. High-frequency data, such as restaurant bookings and mobility data, shows activity is gradually recovering in many developed countries after bottoming out in April, even though a return to pre-epidemic levels still seems far-off.

Some analysts caution, however, that the rally is being driven mostly by short-covering by speculators who had sold stocks earlier on fears of a global recession. Risks that could hobble the global economy include a second wave of COVID-19 infections, Sino-U.S. tensions and rising social unrest in the United States following protests against policy brutality, they said.

"The gap between stock market and the real economy is growing. Many corporate executives must be now wondering why their companies' shares are rising so much," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. The U.S. Treasury yield curve steepened, partly reflecting the sale of more government debt to finance massive stimulus efforts.

The 30-year U.S. Treasuries yield rose to as high as 1.532% , its highest since mid-March. However, expectations of central bank policy support kept shorter yields in check, boosting the yield gap between 5- and 30-year Treasuries to 118 basis points, the highest since early 2017.

The European Central Bank is expected to ramp up stimulative bond purchases when it meets on Thursday, while some think the U.S. Federal Reserve could also enhance its easing with a few key officials discussing yield curve control as an option. In the currency market, economic optimism supported risk-sensitive currencies and pushed down the U.S. dollar.

The Australian dollar rose as much as 1.2% to a five-month high of $0.6982, while the euro ticked up 0.25% to $1.1197. The safe-haven Japanese yen hit a two-month low of 108.85 to the dollar before bouncing back to around 108.57 per dollar .

Oil prices climbed more than 1% to a near three-month high on optimism that major producers will extend production cuts. U.S. West Texas Intermediate crude (WTI) gained 2.7% to $37.81 per barrel and Brent crude rose 1.8% to $40.27 a barrel.

Spot gold traded almost flat at $1,723 per ounce.



Why COVID-19 is unstoppable in USA despite it being ranked at the top of GHS Index?

Several worst-hit countries such as Italy, France, Spain, the UK, Canada, and Russia have peaked COVID-19 cases in April. Almost all of them have gradually flattened the curve. However, the USA is setting new daily records of infections tha...

COVID-19 seems cooking biggest ever global scam

The increasing number of corruption cases on COVID-19 funds from throughout the world and involvement of high profile persons indicate that the countries cant ignore corruption in their pandemic response programs. This has generated the nee...

Health Management Information Systems lack holistic, integrated, and pandemic resilient character

Being a part of the United Nations system, the World Health Organization WHO deserves its share of rebuke for its alleged failure issue COVID-19 health emergency alerts on appropriate time. However, the pandemic has also exposed loopholes i...

Pride in the time of coronavirus: a welcome move online?

This year is different in many ways not least as celebrations are also taking place against the dramatic backdrop of a global health crisis and a resurgence in grassroots activism following the death of George Floyd in Minneapolis. ...


Latest News

Lessons for TN govt school students through TV: Minister

Erode July 9 PTI Lesson for students of Tamil Nadu government schools would be taught through television channels not online, state School Education Minister K A Sengottaiyan said on Thursday. Speaking to reporters at Gobichettipalayam in E...

Many more likely sought jobless aid as virus surges back

The US government will provide its latest snapshot Thursday of the layoffs that have remained stuck at an elevated weekly pace above 1 million since the coronavirus erupted in March even as newly re-opened businesses have rehired some worke...

Correctional Services warns suppliers about PPE scammers

The Department of Correctional Services has warned its suppliers and potential suppliers about scammers pretending to be representatives of the department and issuing fraudulent Request for Quotations RFQs.According to the department, the s...

Gangster Dubey's arrest suspicious, should be probed: Congress

Alleging that gangster Vikas Dubeys safe exit from Kanpur and the sequence of events leading to his arrest in Ujjain seemed suspicious, senior Congress leaders in Madhya Pradesh on Thursday demanded a high-level probe into it. One of the Co...

Give Feedback