European stock markets opened higher on Monday, following the example of Asian markets that recovered overnight.
The FTSE 100 (^ FTSE) was up 1.8% at the open, while the DAX (^ GDAXI) and the CAC 40 (^ FCHI) gained 1.9%.
It came after a strong session in Asia overnight. Japan’s Nikkei (^ N255) rose 1.8%, Hong Kong’s Hang Seng Index gained 3.7% (^ HSI), the Shanghai Composite rose 5.8% (000001.SS) and the Shenzen Component (399001.SZ) rose 4.1 %.
“Those moves are attributed to positive comments about the Chinese state media stock market, that is, a front-page editorial in the Securities Times that suggested a ‘healthy’ bull market after the pandemic is now more important to the economy than ever, Jim Reid, senior strategist at Deutsche Bank, wrote in a morning note to clients.
Sebastian Galy, a macro strategist at Nordea, said investors should “be concerned” about the “government-sanctioned rally in China” that supports global markets.
“The last phase of a demonstration is one of blinders euphoria in ruling out negative data,” Galy wrote in a note to customers.
US futures also rebounded strongly after the long weekend of Independence Day. S&P 500 futures (ES = F) were up 1%, Dow Jones futures (YM = F) were up 1.3%, and Nasdaq futures (NQ = F) were up 1.2%.
“DJIA futures along with S&P 500 futures have started the third quarter with a bang as there is great optimism among investors about fiscal stimulus and economic recovery,” said Naeem Aslam, chief market analyst at Avatrade .
“This optimism and economic recovery are helping investors overcome their fears about the resurgence of the coronavirus wave in the United States and around the world.”
In London, home builders beat the FTSE 100 after a report in the Sunday Times that UK Chancellor Rishi Sunak is considering raising the threshold for the Stamp Tax, a property transaction tax, in a I try to drive growth.
Barratt Developments also presented a positive trade update that increased sentiment in the sector. Barratt said he had seen “high levels of customer interest” since the reopening of his sales centers, with pre-orders now ahead of where they were this time last year. Chief Executive David Thomas said the company was proceeding with “cautious optimism.”
Khaki Housebuilders (PSN.L) rose 5.8%, Taylor Wimpey (TW.L) rose 5.4%, and Barratt Developments (BDEV.L) gained 5.2%.
Then (NXT.L) rose 4.6% and JD Sports (JD.L) added 3.9%. The Guardian reported over the weekend that Sunak is also considering giving the British a one-time £ 500 coupon to spend on the parts of the economy most affected by the COVID-19 shutdown, including physical retail.
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