Hello and welcome to our continued coverage of the global economy, financial markets, the eurozone and business.
Stock markets are pushing higher this morning after the EU struck a landmark deal on a Covid-19 stimulus fund.
After the longest summit in 20 years, European leaders finally signed the 750 Mds € package to help protect and rebuild economies affected by the pandemic.
Importantly, it includes a € 390 billion grant program for the hardest hit member states. That’s below the 500 billion euro package initially offered by Berlin and Paris in May – but it’s still a very important moment.
EU leaders, even “frugal” Austria, Denmark, the Netherlands, Sweden and Finland, have agreed the bloc can borrow collectively to finance the recovery.
Leaders also approved the EU’s next seven-year budget, worth € 1,074 billion.
EC President Charles Michel said the negotiations (which started on Friday morning) had been difficult, but ultimately successful.
It’s a good deal, a good deal, a good deal for Europeans now. I think this will be seen as a pivotal moment in the journey of Europe. “
This will increase stocks in Europe and strengthen peripheral public debt. Germany DAX the index, for example, is expected to increase by more than 1%.
Asia-Pacific stocks have already rallied, led by Australia, as traders cheer the news.
But the deal comes at a price, and not just a loss of sleep for the leaders and the hard-working Brussels press kit. Funding for some EU projects has been cut, including the Horizons program designed to stimulate innovation.
Hopes for a Covid-19 vaccine are also rising, after AstraZeneca and Pfizer both have reported positive results from their first human trials. That pushed up stocks on Wall Street last night as the high tech Nasdaq jumped 2.5%.
Traders have encouraged the fact that the Oxford vaccine, produced by AstraZeneca, is safe and generates an immune response.
The team does not yet know they are fighting the virus (this is currently being tested in larger trials). But hopes are growing, as my colleague Sarah Boseley reports:
After intensive research, Professor Sarah Gilbert, of the Jenner Institute in Oxford, said they were more than happy with the initial results, which showed good immunity after just one dose of the vaccine.
“We are really delighted that he seems to behave exactly as we expected. We have a lot of experience using this technology to make other vaccines, so we knew what we expected to see, and this is what we saw, ”she told The Guardian. .
Any good news about vaccines has sparked a strong backlash from investors – pushing them to buy stocks, in the hope that the global economy can return to normal in time.
This allows investors to largely ignore the fact that the pandemic is still raging, with cases increasing alarmingly in the United States and the WHO increasingly concerned that it is gaining momentum in Africa.
As Stephen Innes of AxiCorp the dish:
At-risk assets move to the rhythm of the vaccine pump after the rain of positive vaccine trials overnight, and investors are still dancing in that rain.
The buzz around a positive vaccine and the recent round of strong macroeconomic data continues to float markets in rough seas. The deteriorating outlook on the virus front continues to deteriorate in the background. But the fear of the virus is less than it was, so the economic crisis should be less this time around.
- 7am BST: UK public finances for June
- 1:30 p.m. BST: Canadian retail sales for June