Stocks climb in Europe as PMIs signal recovery; euro advances

Bloomberg

Stocks advanced in Europe along with US equity futures after manufacturing data from the euro area pointed to further signs of a recovery from the virus slump. Treasuries were steady and the dollar declined.
Carmakers and banks led a broad advance in the Stoxx Europe 600 index as Purchasing Managers’ Indexes (PMIs) showed manufacturing in France unexpectedly returned to growth in May, while the gauge for Germany beat economists’ expectations. The euro strengthened and yields ticked higher on core European bonds.
Futures on the S&P 500 rose after fluctuating earlier in the wake of White House trade adviser Peter Navarro being quoted saying the China trade agreement was over. Crude oil slid along with the offshore yuan, before all the moves began reversing when Navarro said the remark was taken “wildly” out of context. Trump later tweeted that he hoped China would continue living up to the deal. Shares rose across Asia.
While the PMI reports fuelled a risk-on mood, they also summed up the situation for businesses across the region, which are reopening after coronavirus restrictions, but face weak demand and a far-from-normal situation. Even with a sharp rebound now, there’s huge uncertainty about the longer-term implications of the virus.
Still, some influential investors added to the positive sentiment. Steve Schwarzman, chief executive officer of Blackstone Group Inc., said the economy is likely to benefit from a V-type recovery in the next few months, though getting back to 2019 level will take “quite a while.” Hedge fund manager Bill Ackman said he sees gradual improvement on all fronts with so many resources poured into the health-care crisis.
While the IMF will release new 2020 growth projections on Wednesday, US jobless claims, durable goods and GDP data are due on Thursday.
The Euro Stoxx 600 Index climbed 1.3% as off 9:25 am in London and S&P 500 futures gained 0.6%, after having dropped as much as 1.6% earlier. The MSCI Asia Pacific Index rose 0.7%.
While the Bloomberg Dollar Spot Index dipped 0.2%, the Japanese yen fell 0.2% to 107.09 per dollar and the euro gained 0.3% to $1.1292.
The yield on 10-year Treasuries was flat at 0.71% after dropping as much as three basis points earlier and Germany’s 10-year yield dipped two basis points to -0.42%.
While West Texas Intermediate crude gained 0.9% to $41.07 a barrel, gold was little changed at $1,755 an ounce.