Recovery Hope Fires Fresh Rally In Equities, But Concerns Remain
Umer Jamshaid Published June 03, 2020 | 04:07 PM
Growing optimism about the global economic recovery pushed equity markets even higher Wednesday as investors took heart from a further easing of lockdowns and looked past China-US tensions and civil unrest across America
Hong Kong, (UrduPoint / Pakistan Point News - 3rd Jun, 2020 ):Growing optimism about the global economic recovery pushed equity markets even higher Wednesday as investors took heart from a further easing of lockdowns and looked past China-US tensions and civil unrest across America.
The upbeat mood -- and hopes for an extension to a massive crude output cut agreement -- helped oil markets continue their rally, with Brent breaking the $40 mark for the first time in three months.
While coronavirus deaths and infections surge in Latin America, governments in Europe and Asia have become confident enough to lift containment measures that have likely sunk the world economy into recession and destroyed tens of millions of jobs.
Cafes, bars, pools, beaches and schools are cautiously reopening, fanning hopes the second half of the year will see a sharp economic rebound, which -- combined with trillions of dollars in stimulus and central bank support -- have fed an equity rally.
"If I look at the markets, I see a V-shaped recovery," Mark Mobius, co-founder of Mobius Capital Partners, told Bloomberg TV. "That's what the markets are telling us." Tokyo and Hong Kong were more than one percent higher, while Sydney put on 1.8 percent after data showed the Australian economy contracted at a slower rate than feared in the first quarter -- though it is still on course for its first recession in nearly 30 years.
Seoul surged 2.9 percent as South Korea's government unveiled a supplementary budget worth $29 billion, while Singapore was also up more than two percent.
Mumbai, Taipei and Jakarta were also more than one percent higher, while Shanghai added 0.1 percent, Wellington climbed 0.8 percent and Manila soared 3.7 percent.
In early trade, London surged 0.9 percent while Paris and Frankfurt each rose more than one percent.
"The lifting of lockdown restrictions combined with enormous central bank support means investors are shrugging off little things like collapsing GDP and worsening US-China tension," said Neil Wilson at Markets.com.
The gains tracked a rally across European markets and Wall Street, where dealers -- for now -- are looking past anti-racism protests in major US cities that have led Donald Trump to call for the military to be deployed.
- More fuel for oil rally - "For now the good virus news... (is) more than outweighing the bad," said National Australia Bank.
However, it warned that there remained a lot of risk that could spark a massive sell-off.
"On this score it is worth noting that southern US states are still showing a steady increase in infections, Hong Kong extended virus-prevention measures after a new cluster of cases and Tokyo's infections have also spiked," the commentary said.
"If these trends continue we could see the re-introduction of more severe restrictions." World Bank head David Malpass was also concerned about the outlook, saying estimates that anti-virus measures would wipe out $5 trillion are likely to fall far short of the actual damage.
Oil prices added to gains on hopes that major producers will meet to extend their output cuts by one month to August, while investors were also cheered by signs of a further drop in US stockpiles indicating demand is improving.
"The most bullish outcome for oil from the meeting is no sign of squabbling between Russia and Saudi Arabia," whose price war earlier this year helped send prices crashing, said Stephen Innes of AxiCorp.
"Headlines suggest they are on the same page on supply, and that's bullish for oil in the context of an improving demand backdrop." The long-running advance in crude is also providing support to energy-linked currencies, with the Australian dollar up more than one percent, while other higher-yielding, riskier units were also enjoying buying. South Korea's won and the New Zealand dollar were all well up.
- Key figures around 0810 GMT - Tokyo - Nikkei 225: UP 1.3 percent at 22,613.76 (close) Hong Kong - Hang Seng: UP 1.4 percent at 24,325.62 (close) Shanghai - Composite: UP 0.1 percent at 2,923.37 (close) London - FTSE 100: UP 0.9 percent at 6,275.28 West Texas Intermediate: UP 2.3 percent at $37.66 per barrel Brent North Sea crude: UP 1.7 percent at $40.23 per barrel Euro/dollar: UP at $1.1217 from $1.1166 at 2040 GMT Dollar/yen: DOWN at 108.67 yen from 108.69 yen Pound/dollar: UP at $1.2596 from $1.2550Euro/pound: DOWN at 89.07 pence from 88.96 penceNew York - Dow: UP 1.1 percent at 25,742.65 (close)
Related Topics
Recent Stories
Today Gold Rate in Pakistan 27 April 2024
HEC reviews curricula for environmental sciences degree programme
ICC Asia looking forward to an action-packed Asia Cricket Week
Yuvraj Singh named ICC Men’s T20 World Cup 2024 Ambassador
Greece hands Olympic flame to 2024 Paris Games hosts
Two Kyiv hospitals evacuating over feared Russian strikes
World must act on neurotech revolution, say experts
Charles & Catherine's cancer diagnoses
Champions Alcaraz and Sabalenka through in Madrid Open
King Charles to resume some public duties during cancer treatment: palace
US defense chief announces $6 bn in security aid for Ukraine
Heavy rains cause damage to Spezand-Taftan railway track
More Stories From Business
-
Today Gold Rate in Pakistan 27 April 2024
39 minutes ago -
Finance minister reviews progress on FBR digitalization
10 hours ago -
US stocks rebound on tech earnings, London hits new record
10 hours ago -
US approves gene therapy treatment for hemophilia
10 hours ago -
KATI president for inclusion of agri sector in tax net
10 hours ago -
Ahsan chairs 13th CPEC-JCC preparatory meeting, reviews arrangements for high-level delegation’s v ..
11 hours ago
-
Police to take every step for security of business community: IGP
11 hours ago -
WB director, Planning minister discuss reforms in development projects
11 hours ago -
IP rights crucial in achieving SDG : Jam Kamal
13 hours ago -
FBR’s data protection efforts commended by OECD assessment team
13 hours ago -
US stocks rebound on tech earnings, London hits new record
13 hours ago -
SECP-IFSB workshop highlights Pakistan's progress in Islamic Finance Development
13 hours ago