Stocks extend gains with US futures; bonds drop

Bloomberg

Stocks in Europe and Asia gained on Tuesday alongside US equity futures amid continuing optimism the spread of coronavirus may be slowing in major economies. Bonds extended declines and the dollar weakened.
The Stoxx Europe 600 Index jumped at the open as every major national gauge in the region advanced. Futures for the three main American benchmarks also all climbed after the S&P 500 Index on Monday closed at its highest since March 13. The MSCI Asia Pacific Index rose more than 2% after adding nearly 3% a day earlier. The dollar, a key barometer of funding strains, retreated the most since late March. The pound gained despite concern for Prime Minister Boris Johnson, who was moved into intensive care as he battles the virus.
Riskier assets including stocks and corporate bonds have started the week resuming a remarkable rebound amid the ongoing pandemic. Unprecedented and rapid stimulus by the world’s policy and law makers helped to spur the bounce, which has been given new impetus by signs the rate of increase of both the death toll and new infections may be easing. Still, as the economic impact of the measures taken to bring the outbreak under control continue to be felt, many market participants warn against expectations of a sustained rally.
“Optimism on the direction of equity markets will be difficult to maintain until we see more clarity on the corporate earnings outlook and until the dispersion of analysts’ forecasts subsides,” Marija Veitmane, a multi-asset strategist at State Street Global Markets, wrote in a note.
Elsewhere, Australia’s dollar rallied and bond yields surged after the country’s central bank signaled that markets are functioning well and continued improvement would allow for a scaling back in purchases of government debt. Chinese stocks climbed and the yuan strengthened in the wake of further targeted stimulus by policy makers as Shanghai reopened after a long weekend.

While futures on the S&P 500 Index advanced 2% as of 8:12 a.m. London time, the Stoxx Europe 600 Index increased 2.8%.
The MSCI Asia Pacific Index climbed 2.2% and the Bloomberg Dollar Spot Index declined 0.6%. The euro increased 0.7% to $1.0866 and the British pound gained 0.8% to $1.2324 and Japanese yen gained 0.4% to 108.83 per dollar. The yield on 10-year Treasuries increased six basis points to 0.73%.
While Germany’s 10-year yield climbed four basis points to -0.38%, Britain’s 10-year yield jumped four basis points to 0.368%.