Global stocks prolong rally; dollar drops to March low

Bloomberg

The global rally in stocks held its momentum on Wednesday as investors showed more optimism of quick economic recovery from the coronavirus pandemic. Treasuries dipped with gold, and a dollar gauge hit its lowest level since early March.
Gains in insurance and auto shares pulled the Stoxx Europe 600 Index higher. Contracts on the S&P 500 Index rose along with those on the Nasdaq 100, which closed on Tuesday within 1% of its record high. The euro climbed for a seventh session as data showed economic activity in the 19-nation common-currency region rose in May to highest in three months after an easing of lockdown restrictions allowed companies and shops to resume business.
In Asia, South Korea shares advanced the most after the country detailed a third round of fiscal stimulus. Brent crude oil extended its rebound above $40 as investors eyed a potential extension of record production curbs by Opec+.
Stocks have advanced globally for eight days to their highest level versus estimated earnings since the early 2000s, as more businesses reopen around the world and manufacturing gauges show economies stabilising following shutdowns. That’s despite a slew of risks, including tense US-China relations that may jeopardise a hard-won trade deal as well as violent protests and looting in American cities.
“If I look at the markets, I see a V-shaped recovery,” Mark Mobius, co-founder at Mobius Capital Partners, said on Bloomberg TV. “What we’re hearing from companies around the world is that once the lockdown is over, they’re going to get the customers coming back in droves.”
Elsewhere, Indonesia’s rupiah was the outperformer in currencies, after record orders at a local bond auction. MSCI’s gauge of emerging-market stocks climbed close a three-month high.
In Europe, the ECB is expected to top up its rescue program with an additional 500 billion euros of asset purchases at a meeting on Thursday. Anything less than an expansion would be a big shock, Bloomberg Economics said.
The US labour market report on June 5 will probably show American unemployment soared to 19.5% in May, the highest since the 1930s.
The Stoxx Europe 600 Index climbed 1.1% as of 9:31 am London time and futures on the S&P 500 Index rose 0.4%. While Italy’s FTSE MIB Index gained 2%, the MSCI Asia Pacific Index increased 1.3%.
The Bloomberg Dollar Spot Index declined 0.3% and the euro jumped 0.4% to $1.1211.
While the British pound increased 0.2% to $1.2581, the Japanese yen weakened 0.1% to 108.77 per dollar. The Indian rupee also weakened 0.2% to 75.475 per dollar.
The yield on 10-year Treasuries rose two basis points to 0.70% and Germany’s 10-year yield climbed three basis points to -0.39%. Britain’s 10-year yield increased three basis points to 0.253%.
As Brent crude gained 1.3% to $40.09 a barrel, gold weakened 0.5% to $1,718.54 an ounce. LME copper was little changed at $5,530.50 per metric ton and iron ore climbed 0.2% to $98.31 per metric ton.