European stocks climb with US futures; oil, gold advance

Bloomberg

Stocks climbed in Europe alongside US equity futures on Monday as investors found reason for encouragement in signs businesses are reopening across major economies and after shares sank last week. Crude oil advanced.
The Stoxx Europe 600 Index rose on gains in mining and travel shares, including airlines IAG SA and Ryanair Holdings Plc. S&P 500 contracts increased after the underlying gauge’s worst week since mid-March, and in the wake of news that California’s economy is now 75% open after virus restrictions were eased. Apple Inc. will open more than 25 US stores this week, adding to almost 100 globally. Stock indexes in Japan, Hong Kong and South Korea all posted modest advances.
Gold traded at its highest in seven years, while West Texas oil rose above $30 a barrel for the first time in two months as producers in the US and elsewhere continued to cut activity. Gilts rose as traders bet the Bank of England will take its benchmark interest rate under zero in December.
Investors begin a new week seemingly cheered by hopes for a rebound and shrugging off data that paints a stark picture of the coronavirus’s damage. Federal Reserve Chairman Jerome Powell said the US economy will recover from the coronavirus pandemic, but the process could stretch through until the end of next year and depend on the delivery of a vaccine. Several European countries ended bans on short selling, as they continued to report the lowest number of daily deaths from the virus since March.
“With the worst of the pandemic likely behind us, central bank supported equity markets are unlikely to re-test their lows,” said Seema Shah, chief strategist at Principal Global Investors. “Yet, while reopening momentum may well carry risk assets a bit higher over the near term, the tepid economic recovery and deep uncertainty over the virus outlook argue against a pivot to more risk-on positioning.”
Elsewhere, industrial metals climbed after China announced guidelines to revive large infrastructure projects. Currencies of ore and crude oil exporters strengthened, from Norway’s krone to the Australian dollar.
The Stoxx Europe 600 Index climbed 2.1% as of 10:26 am London time and futures on the S&P 500 Index rose 1.5%. While Germany’s DAX Index jumped 2.9%, the MSCI Asia Pacific Index rose 0.1%.
The Bloomberg Dollar Spot Index was little changed, and the euro dipped 0.1% to $1.0805.
While the British pound was little changed at $1.2112, the Japanese yen weakened 0.2% to 107.27 per dollar and the Mexican peso strengthened 0.4% to 23.8598 per dollar.
The yield on 10-year Treasuries fell less than one basis point to 0.64% and Germany’s 10-year yield decreased two basis points to -0.55%.
Britain’s 10-year yield dipped two basis points to 0.208% and Portugal’s 10-year yield also declined four basis points to 0.838%.
West Texas Intermediate crude increased 5.7% to $31.10 a barrel. While gold strengthened 1% to $1,761.16 an ounce, iron ore rose 3.3% to $93.51 per metric ton.