European and US shares make gains amid recovery optimism
Investors pin hopes on more stimulus measures for ailing sectors
European stocks rose on Wednesday, while US stocks also advanced in early trading, amid upbeat quarterly earnings reports from retailers and hopes of a recovery from the coronavirus-triggered slump.
European shares traded higher as the day progressed as investors were optimistic that more central bank and government stimulus for ailing sectors will be forthcoming. The pan-European Stoxx Europe 600 index added 1 per cent.
The Iseq closed 1.25 per cent higher in Dublin, with key stocks CRH and Ryanair recovering early losses. There were gains across Europe, with markets in the UK, Germany, France, Spain and Italy all rising.
Asian stocks struggled to extend the week’s rally on Wednesday, and gold and bonds firmed, as a sceptical press report dented some hopes for a Covid-19 vaccine and concerns about the global recovery from the pandemic returned.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat. The risk-sensitive Australian dollar retreated from a two-month high struck on Tuesday and safe-haven demand drove US Treasury yields back under 0.7 per cent.
The drift follows a downbeat end to Tuesday trade on Wall Street after a report from medical news website STAT cast doubt over encouraging early results from a Moderna Covid-19 vaccine trial.
The report said the results, which had rallied global stocks this week, lacked detail.
“This is probably more a stabilisation than anything else, because markets have rallied hard on opening up and the potential for a V-shaped recovery,” said Jun Bei Liu, a portfolio manager at Australia’s Tribeca Investment Partners.
“The market is a little bit directionless,” she said, with investors waiting to take their next cues from company outlook commentaries and confidence surveys.
Two thirds of 223 fund managers surveyed by Bank of America reckon recent gains are a bear-market rally.
Around Asia, the Chinese yuan and stocks in Hong Kong and China idled just under flat as investors wait to hear the government’s economic plans, due to be announced during the annual gathering of parliament beginning on Friday.
Australian shares ground higher and Japan’s Nikkei rose 1 per cent, helped by a softer yen and anticipation that declining infection rates will make a case for swift economic re-opening.
Japanese business confidence slumped to a decade low as the economy entered recession while Australian retail sales suffered their steepest ever dive in April. British jobless claims are at their highest in 20 years.
And the US economy won’t recover its lost ground until sometime after next year, the non-partisan Congressional Budget Office said on Tuesday.
In currency markets the euro remained supported in the afterglow of a Franco-German proposal for a common relief fund – a possible way through tensions between European Union members. – Reuters