Investors anticipate an economic recovery despite data showing the serious damage caused by coronavirus blockages. Later today, non-farm payroll figures in the United States are expected to show further deterioration in the US labor market.
Buoyed by a jump in banks, insurers, automakers and travel, the pan-European STOXX 600 jumped 1.3%, still benefiting from a boost from the European Central Bank’s commitment to provide extra money to its Pandemic Emergency Purchase Program (PEPP).
The STOXX 600 is about 15% below all-time highs, but has recovered more than 37% from the March lows.
The largest MSCI Asia-Pacific equity index outside Japan rose 0.7%, offsetting expected losses to stay near a 12-week high.
The index is up about 7.4% this week, on track for its best weekly performance since December 2011.
With investors temporarily in risk mode, emerging market stocks rose 0.6% on the day and on track for their best week since December 2011.
“The European Central Bank’s decision was better than expected in terms of liquidity,” said François Savary, chief investment officer of Swiss wealth manager Prime Partners. “The market is buoyed by the feeling that everything is going well and a recovery is in sight for the second half. But the big question is whether the market is ahead of the fundamentals? There is room for consolidation. “
The future E-mini of the S&P 500 increased by 1%.
Analysts have warned of exhilarating levels, as equity valuations are at their highest level since the dot.com boom in 2000, according to Matthew Sherwood, investment strategist for Perpetual.
Global stock markets were beaten in March when they hit “bearish territory,” fearing that the forced closings linked to COVID-19 would push the world economy into a long and deep recession.
Market sentiment has since been strengthened by the revival of central banks.
However, Bob Michele, chief investment officer and global group in fixed income, currency and commodities at JPMorgan Asset Management, warned that massive quantitative easing would distort prices and cut traditional bond market signals on growth and inflation, advocating “co-investment” Alongside central banks.
Investors’ attention is now focused on Friday’s US jobs report, which should show that non-farm payrolls fell 8 million jobs in May after a record drop of 20.54 million in April.
The unemployment rate in the United States is expected to reach 19.8%, a record after the Second World War, against 14.7% in April.
Currency markets continued to show confidence in the expected recovery of the global economy.
Set for a third consecutive week of gains, the euro rose to $ 1.1380, its highest level since March 10 and was on track to make a weekly jump of 2.5% and a ninth consecutive day of gains, its longest series of increases ever recorded since October 2004..
The dollar index is on track for its third consecutive week of losses at 96.611, near its lowest level in nearly three months.
All eyes will then be on the US Federal Reserve, which is holding its regular two-day political meeting next week.
The Australian dollar rose 0.8% to $ 0.6999, briefly rising above $ 0.70 for the first time since early January.
German government bond yields hit their highest levels in months, while borrowing costs from Italy and other low-rated southern European countries continued to decline after the considerable support effort from the ECB.
In commodities, American crude gained 1.4% to $ 37.92 a barrel and Brent added 0.8% to $ 40.76, with benchmarks on track for a sixth week of gains, thanks to production declines amid signs of improved fuel demand.
Spot gold fell 0.2% to $ 1,708.07 an ounce, forecast for a third consecutive weekly decline as hopes for an economic recovery fueled demand for riskier assets.
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