European stocks add to rally, shrug off infection concerns

Bloomberg

Stocks pushed higher in Europe along with US equity futures as investors looked past a worrying increase in coronavirus cases to government and monetary stimulus. The dollar slipped.
In the wake of Tuesday’s global rally, gains in real-estate and banking shares brought fresh momentum to the Stoxx Europe 600 Index. S&P 500 futures swung from modest declines to gains, building on the index’s increase from Tuesday following data showing a surprising rebound in US retail sales. Treasuries were mixed.
“Global markets could remain stretched between a health situation likely to remain a threat in several regions for some time on the one hand, and a stream of positive macro figures confirming that we have passed the low point on the other,” said Xavier Chapard, a global macro strategist at Credit Agricole.
For now, investors are reflecting optimism as they hunt for fresh catalysts after Federal Reserve Chairman Jerome Powell said the US economy has a long way to go before it reverses the substantial damage done by the pandemic. Meanwhile, second-wave and geopolitical concerns provide cause for caution.
“Powell’s remarks reinforce our view that the Fed’s priorities are shifting from emergency actions aimed at preventing a market melt-down to long-lasting actions to support the fastest possible recovery in the real economy,” Chapard said.
China is escalating containment measures in Beijing including canceling flights as it grapples with how to stem a growing outbreak, while Florida reported record new cases. Meanwhile, Chinese and Indian troops are engaged on their border, while North Korean plans for troop deployments rattled sentiment in Seoul.
Elsewhere, Asian equities saw a mostly lackluster session except for shares in South Korea, which were volatile in the wake of rising tensions with North Korea. The won currency slid against the dollar. Crude oil advanced.
Futures on the S&P 500 Index increased 0.8% as of 9:32 am London time and Nasdaq 100 Index futures climbed 0.7%. While the Stoxx Europe 600 Index gained 0.9%, the MSCI Emerging Market Index rose 0.4%.
The Bloomberg Dollar Spot Index declined 0.2% and the euro climbed 0.1% to $1.1272.
While the British pound was little changed at $1.2572, the Japanese yen weakened 0.1% to 107.41 per dollar. The South Korean Won also weakened 0.6% to 1,213.97 per dollar.
The yield on 10-year Treasuries climbed one basis point to 0.76% and the yield on two-year Treasuries fell less than one basis point to 0.20%. While Germany’s 10-year yield increased six basis points to -0.36%, Britain’s 10-year yield rose one basis point to 0.22%.
Brent crude climbed 1.1% to $41.40 a barrel and gold weakened 0.2% to $1,723.48 an ounce. LME zinc gained 1.2% to $2,020 per metric ton.