Equities in Europe and Asia ticked higher amid signs of thawing US-China trade tensions and further indications the worst of the coronavirus pandemic may have passed in many large economies.
The composite Stoxx 600 Europe index climbed 0.5 per cent in morning dealings on Friday, with benchmarks in Frankfurt and Paris climbing about 0.6 per cent each. MSCI’s Asia-Pacific index rallied 1.6 per cent. London’s markets were closed for a public holiday.
Futures trading tipped Wall Street’s S&P 500 to rise 0.8 per cent when trading begins in New York later on Friday after top US officials said their trade pact with China remained on track despite rising tensions over the spread of coronavirus.
The upbeat sentiment follows gains on Thursday, when the Nasdaq Composite shed what had been heavy year-to-date losses on the back of vigorous gains over the past month in the shares of big tech companies, including Apple, Amazon, Alphabet, Facebook, Netflix and Microsoft.
Markets around the world have rebounded at a historic velocity, with MSCI’s measure of global equities rallying by a quarter in just 34 trading days since reaching a bear market trough on March 23. The barometer is still down 15 per cent from the end of 2019.
Investors’ confidence has been bolstered in recent weeks by a “significantly improved” outlook on the trajectory of the Covid-19 pandemic and governments’ abilities to begin reopening their economies, said Marko Kolanovic, head of quantitative and derivatives research at JPMorgan.
“We saw an earlier-than-expected apex and lower peak of hospital resource use, broader-than-expected spread of the virus, and estimate a lower mortality rate than consensus models,” he said. “This means economic activity could pick up sooner than most expected, and any potential future virus waves are likely to be less severe.”
Mr Kolanovic said that while the collapse in economic activity brought on by lockdowns and other measures was unprecedented, “so too is the global policy response to cushion the impact and support a recovery as containment measures are relaxed”.
Investors are expected to pay close attention on Friday to the monthly employment report from the US labour department, which is expected to show America’s jobless rate hit 16 per cent for April, the highest level since the second world war.
Economists said they would be looking for further detail on the damage wrought by measures to slow the spread of coronavirus in the world’s biggest economy and data that could foreshadow the shape of the future recovery in America’s labour market.
“April’s dour numbers will be watched closely, providing, by far, the best read yet on the full extent of the economic fallout from social distancing measures in the US,” said Michael Gapen, chief US economist at Barclays.
In the European fixed income markets, traders were bracing themselves for a ratings decision by Moody’s on Italy due after the close of trade on Friday. The sovereign is rated just above speculative grade, or junk, with the rating company. While a downgrade is considered to be unlikely, even a reduction in Moody’s outlook could spark fresh selling pressure in Italy’s government bond market, one of the biggest in Europe, fund managers say.
Oil prices edged higher on Friday on optimism over an eventual economic recovery following the coronavirus crisis. Brent crude, the international benchmark, climbed 1.8 per cent to $29.97 a barrel. West Texas Intermediate, the US marker, gained 2.9 per cent to $24.23.
https://news.google.com/__i/rss/rd/articles/CBMiP2h0dHBzOi8vd3d3LmZ0LmNvbS9jb250ZW50L2E5OTk5ZWYxLTEzNzMtNDFiNy04ZDU1LWQ3ODBmZDA2ODI1ZNIBP2h0dHBzOi8vYW1wLmZ0LmNvbS9jb250ZW50L2E5OTk5ZWYxLTEzNzMtNDFiNy04ZDU1LWQ3ODBmZDA2ODI1ZA?oc=5
2020-05-08 09:01:04Z
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