Stocks rise as EU leaders reach deal on stimulus package
Landmark package buoys markets globally
German Chancellor Angela Merkel and French President Emmanuel Macron leave after their joint video press conference at the end of the European summit. Photograph: John Thys/Pool/AFP via Getty Images
Stocks advanced globally alongside US equity futures after European leaders reached a deal on a landmark stimulus package.
The Stoxx Europe 600 Index added 1 per cent as of 8.10 am in Dublin. Earnings were also in focus, with UBS climbing 2.2 per cent after reporting net new money and profit that beat estimates and expressing confidence about dividends, while Novartis dropped 1 per cent after trimming its 2020 sales forecast.
The agreement over the EU recovery fund is further boosting sentiment, following optimism about a vaccine against the coronavirus. A gauge of risk in the region’s investment-grade debt dropped to the lowest since February.
Equities in Europe have outperformed US and global shares since mid-May, when the stimulus proposal was first announced, with several strategists and investors citing it as a reason to prefer the region’s stocks. The agreement over the EU recovery fund is “a big deal for the bloc which will see countries borrow together for the first time,” said Jasper Lawler, head of research at London Capital Group
S&P 500 contracts climbed after the benchmark turned positive for the year and the Nasdaq 100 jumped to a record on demand for companies like Amazon. com and Zoom Technologies that benefit from more people staying at home due to the pandemic. Treasuries were steady, crude oil edged higher and silver rose for a third session.
“The market, particularly tech stocks, is rallying on both good news and bad news, that tells us it’s all about momentum and not about the facts,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty. “There are concerns we could see significant pullbacks before we make further gains, but at the moment you can’t stand in front of the train that is the Nasdaq 100 Index.”
Investors are keeping an eye on Washington, where lawmakers are starting to hammer out the next virus relief plan. Meanwhile, euro-area leaders agreed on a stimulus package to pull their economies out of the worst recession in memory and tighten the financial bonds holding their 27 nations together.
Monetary and fiscal “tapering will not occur until we have significant health progress,” Mariann Montagne, a portfolio manager at Gradient Investments, said on Bloomberg TV.– Bloomberg