Global stocks and oil prices rallied as investors welcomed tentative signs the easing of lockdowns in many major economies has so far not sparked a large “second wave” of coronavirus infections.
European shares on Monday recorded sharp gains in morning trading, with the FTSE 100 rising 2.2 per cent and Germany’s Dax climbing 2.8 per cent.
Futures markets pointed to gains for US stocks when trading begins on Wall Street later in the day, with the S&P 500 tipped to rise 1.5 per cent.
The global economy is beginning to reanimate following weeks of near standstill to control the spread of the pandemic. Expectations for an economic rebound, coupled with strong central bank support, have helped stock markets rise sharply since their lows in late March, with the S&P 500 up more than 25 per cent.
Rates
Economists and investors are now watching the easing of lockdowns for any signs that infection rates have begun to rise again, but Paul Donovan, chief economist at UBS Global Wealth Management, said it was positive that European economies “have had no reason to reverse lockdown easing so far”.
As states in the US loosen their restrictions on movement and social contact, Jay Powell, Federal Reserve chair, said the central bank “wasn’t out of ammunition by a long shot” to support the economy.
Still, in an interview with CBS on Sunday he warned that a full US economic recovery may take until the end of next year and require the development of a Covid-19 vaccine.
“It does feel like we’re in the middle of a phoney war at the moment with all of us waiting to see how efficiently the various economies are able to reopen given all the social distancing that will be required,” said Jim Reid, strategist at Deutsche Bank.
West Texas Intermediate, the US crude benchmark, rose 5.6 per cent to $31.10 a barrel on Monday, climbing above $30 (€27.78)for the first time in two months, as demand showed signs of picking up, while supply cuts began to take effect.
A month ago, prices collapsed into negative territory for the first time as a lack of storage capacity forced producers to pay buyers to take the product off their hands.
Fear of a similar price collapse ahead of the expiry this week of the US crude futures contract for delivery next month appears to have subsided.
Concerns
“The relative improvement in sentiment toward crude and easing concerns over whether storage was reaching tank tops should prevent a repeat of last month’s hysteria,” said Edward Bell, commodity analyst at Emirates NBD.
Brent crude, the international benchmark, rose 5.7 per cent to $33.90 a barrel as traders responded to signs demand was recovering as parts of Europe and North America began easing some virus-related restrictions.
In Asia, stocks edged higher, with Japan’s benchmark Topix index rising 0.4 per cent despite data confirming the country slipped into recession in the first quarter. Hong Kong’s Hang Seng index gained 0.6 per cent while China’s CSI 300 index of Shanghai and Shenzhen-listed stocks rose 0.3 per cent.
Gold prices climbed, with the spot price up 1.2 per cent at $1,763 per troy ounce - a new seven-and-a-half-year high. – Copyright The Financial Times Ltd
