South Korea has warned of a second wave of the new coronavirus as infections rebounded to a month high, while new infections have accelerated in Germany.
Yet millions of French people are expected to cautiously break out of one of Europe’s tightest blockages on Monday, as European countries relax the restrictions.
Investors appeared determined to remain optimistic and the largest MSCI Asia Pacific equity index outside Japan. MIAPJ0000PUS strengthened 1.1%.
Japanese Nikkei .N225 added 1.6% and Chinese blue chips .CSI300 0.7%. The E-Mini futures for the S&P 500 ESc1 opened slowly but rebounded over the morning and rose 0.5%.
EUROSTOXX 50 STXEc1 futures contracts gained 0.8% and FTSE FFIc1 futures contracts 0.7%.
Wall Street rallied on Friday after April’s payroll report was terrible, but not nearly as terrible as analysts’ worst fears.
“Simply publishing the worst jobs report in history is useful for risky assets,” said Alan Ruskin, director of G10 FX at Deutsche Bank.
“Since the end of March, there has been an extraordinary divergence between the real economy and financial risk, the latter being helped by an unprecedented adjustment policy,” he added.
“The markets know the data in the real economy is awful. We are less sure how long markets, helped by politics, can challenge the real economy if growth is slow to improve. “
The bond market certainly seems to think that any recovery will be slow with two-year yields US2YT = RR reaching record lows at 0.105% and futures on Fed funds become negative for the first time.
The price hike occurred even as the US Treasury planned to borrow billions of dollars over the next few months to fill a yawning budget deficit.
Federal Reserve Chairman Jerome Powell is scheduled to deliver an opening speech on Wednesday and analysts suspect he will rule out taking negative rates, at least for now.
The drop in US yields could have been a burden on the dollar, but with rates everywhere close to or below zero, the major currencies were stuck in tight ranges.
The dollar was a little stronger on the yen at 106.94 JPY = Monday, but well in the range 105.97 to 109.37 which has been going on since the end of March. The euro was slightly weaker at $ 1.0830 EUR = but above last week’s low at $ 1.0765.
Against a basket of currencies, the dollar slowed down to 99.837 = USD, sandwiched between support at 98.769 and resistance around 100.40.
In the commodities markets, gold rose 0.5% to $ 1,708 per ounce XAU =.
Oil prices have started to drop by about 1% as persistent glut has weighed on prices and the coronavirus pandemic has eroded global demand for oil, although some governments have started to ease closings.
Futures on Brent LCOc1 fell 54 cents to $ 30.43 a barrel, while US crude CLc1 fell 53 cents to $ 24.21.
Editing by Sam Holmes & Shri Navaratnam
Our standards:Principles of the Thomson Reuters Trust.