Euro hits highest level in 4 months as traders consider discussing recovery fund


The euro hit a four-month high against the dollar after EU leaders appeared to move closer to a deal on the size of a new coronavirus recovery fund.

After three days of haggling over the stimulus fund, which pitted the leaders of the wealthiest countries against the countries hardest hit by the pandemic, Dutch Prime Minister Mark Rutte and Austrian Chancellor Sebastian Kurz have both expressed optimism about at the end of the impasse.

The night negotiations broke off at 6 a.m. on Monday after Charles Michel, President of the European Council, launched a new figure of 390 billion euros in subsidies for the affected countries. This figure was lower than the proposals presented at the summit, but higher than the previous demands of an alliance of so-called “frugal” nations, including the Netherlands.

The euro strengthened 0.3% to $ 1.146, its highest level against the dollar since early March. Against the pound, the euro jumped 0.53% to 91.36p. European stock indexes have not budged, however. The Euro Stoxx index opened a fall of 0.1% while the German Dax lost 0.2%.

China’s CSI 300 index of stocks listed in Shanghai and Shenzhen jumped 2.6%, according to reports that Beijing was taking steps to support a recent rally in stocks. Regulators said on Friday they would allow insurers to invest more of their assets in the stock market.

Financial services and basic materials inventories were among the main winners, with traders also betting that severe flooding in parts of the country would lead to infrastructure replacement in many cities.

“There is a lot of speculation about more politics [support] come for. . . the building materials sector, ”said a mainland brokerage manager.

In Hong Kong, chip maker SMIC fell 7.4% after its secondary broadcast in mainland China last week. The company’s Shanghai-listed shares fell 5.8%.

The weakness of Hong Kong’s wider market came as the city suffered a new wave of coronavirus infections. Japanese stocks were weighed down by data showing exports in June fell at a faster pace than economists expected.

Futures have pushed Wall Street’s S&P 500 to slide 0.4% when trading begins later Monday.

US stocks edged up 0.3% on Friday, allowing the S&P 500 to close higher for a third week in a row. But the index remains in negative territory for the year, with investors worried about the impact of an expiration of unemployment benefits set at the end of the month.

The sentiment was also mitigated by an increase in the number of coronavirus cases in the United States. New daily cases surpassed 64,000 on Sunday as Texas, Florida and California continued to lead infection counts.

Investors are looking for new clues as to how the pandemic has affected corporate earnings, with Microsoft, IBM and Unilever among those releasing second quarter results this week.

Oil prices lost ground with Brent, the international benchmark, falling 0.6% to $ 42.87 per barrel. West Texas Intermediate, the US marker, fell by the same amount, to $ 40.34.


Please enter your comment!
Please enter your name here