Off The Wire
Global stocks surge to 10-week high on recovery hopes
LONDON/SINGAPORE (Reuters) - Global stocks rose to a 10-week high on Wednesday as investors regained hopes of recovery from a coronavirus-fuelled recession, while oil prices also strengthened.
Italian bonds remained at their multi-week lows, continuing to gain from a Franco-German plan for a 500 billion-euro coronavirus recovery fund, ignoring a hawkish counter-proposal in the works.
Europe’s STOXX 600 index recovered from earlier losses to add 0.4%. The blue-chip FTSE 100 gained 0.4%.
U.S. stocks jumped more than 1% at the open on upbeat earnings reports from retailers. The S&P 500 added 1.05% and the Dow Jones Industrial Average rose 1.03%. The world stock index was 1.2% stronger, its highest level since March 9.
“We are in one of those situations where if there’s no bad news, the path of least resistance is for equities to move higher,” said James Athey, investment director, Aberdeen Standard Investments.”
Two-thirds of 223 fund managers surveyed by Bank of America reckon recent gains are a bear-market rally.
Oil gained and gold rose to $1,748.34 per ounce. [GOL/]
Italy’s 10-year bond yield was holding near five-and-a-half-week lows hit following the recovery fund announcement. The gap with Germany’s 10-year yield was at 210 basis points, close to Tuesday’s five-week lows. [L8N2D21OU]
The U.S. dollar extended its decline, down 0.3% to a three-week low. The euro edged up 0.2% to $1.0960, near Tuesday’s two-week peak of $1.09755, supported by the Franco-German proposal for recovery fund.
Elsewhere, New Zealand central bank chief Adrian Orr backtracked from the possibility of negative rates, a prospect he had flagged just days before. That helped support the kiwi dollar.
Doubts about the outlook held back commodity prices. Japanese business confidence slumped to a decade low as the economy entered recession. Australian retail sales suffered their steepest-ever decline in April.
And the U.S. economy won’t recover its lost ground until sometime after next year, the non-partisan Congressional Budget Office said on Tuesday.
Brent crude futures were at $35.51 per barrel, up 2.5%. U.S. crude was 2.3% higher at $32.69 a barrel on signs of improving demand and a drawdown in U.S. crude inventories. [O/R]
“While countries have started to relax restrictions on economic and social activities, economies will not return to where things were before the outbreak,” said strategists at Singapore’s DBS bank in a note.
“Geopolitical tensions, especially between the U.S. and China, have also returned and are likely to intensify into the U.S. elections in November.”
Editing by Larry King