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Coronavirus hopes to drive stock, higher euro

LONDON (Reuters) – World stock markets received a second day of strong gains on Tuesday as signs of progress against the corona virus in both Europe and the United States and more liberal aids in stimulating investors to recharge.

FILE PHOTO: The German stock price index DAX graph is depicted on the Frankfurt Stock Exchange, Germany, April 6, 2020. REUTERS / Staff / File Photo

It rose further from commodity markets as oil climbed to nearly 3% in hopes of supply, while currency markets also came to life when a tumultuous dollar saw the euro trend out of a six-session fall.

However, equities were the main measure. Japan̵

7;s Nikkei followed up Wall Street’s 7% increase on Monday [.N] with a 2% jump when the government promised a stimulus package of nearly $ 1 trillion – equivalent to a fifth of GDP.

Europe quickly turned things around. The pan-European STOXX 600 index rose by more than 3% as the respective markets in London, Frankfurt, Paris and Milan were higher.

“One day is not a trend, one week is not a trend … but we believe the market is at the bottom,” said Jeff Mortimer, Head of Investment Strategy at BNY Mellon Wealth Management.

“We try to get customers to understand that (in market performance) better times ahead can come faster than you expected.”

Worldwide, the virus has infected more than 1.3 million people and killed over 74,000, and although the number is still increasing in many populated countries, some tentative improvements have given hope.

In the hardest hit Italy and Spain, the authorities have begun to look ahead to facilitate the shutdowns after steady falls in mortality rates. Even in the United States, the daily number of deaths in the country’s most affected area, New York, has shown signs of a steady decline.

The US dollar, which has been sufficiently flowing in safe seas for weeks, went against most major currencies.

The euro shot up 0.7% to $ 1.0865 to catch a six-day fall, the pound climbed despite intensive care in the UK Prime Minister and the Australian dollar jumped 1.5% to its highest in a week.

The New Zealand dollar also rose 1.3% while the Japanese Yen shook off an early dip to climb up to 108.92 per US dollar. [/FRX]

Not only were oil crude markets higher either, copper punched up to a 3-week high with a 3% gain for industrial metals, while gold in the safe seas disappeared.

Benchmark 10-year-old US financial companies and German Bund also continued to lose. US yields – reversed in price – rose to 0.73% after dropping nearly 9 points on Monday, and the Bund yield rose up to 6-9 points above the curve.

The Eurogroup for finance ministers within the single currency block in the euro area is scheduled to meet later on Tuesday, and analysts expect more joint measures to help boost member states’ economies.

Cyprus, one of the lowest ranked countries in the bloc, markets an issue of seven and 30 years. In Asia, Indonesia issued a 50-year bond.

“Investors have recently discovered increased public support for the concept of coronabonds in the European Commission and ECB circles,” said DZ Bank analyst Daniel Lenz, adding that the German ECB board member Isabel Schnabel was among those who seemed to support voting.

Further reporting by Abhinav Ramnarayan in London; Editing by Peter Graff

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