LONDON (Reuters) – European stocks rebounded on Tuesday after a weak start, spreading optimism for the Asian session, and oil prices stabilized as investors looked for signs of an economic recovery in the second half of 2020.
FILE PHOTO: The DAX chart of the German Stock Price Index is shown on the Frankfurt Stock Exchange, Germany, on June 26, 2020. REUTERS / Staff
The MSCI global equity index, which tracks stocks in 49 countries, rose approximately 0.1% at 1056 GMT, after Asian stocks rose on solid data from the US property market and Chinese factories. European stocks continued recovery.
Global stocks have fallen about 8% so far this year, having fallen 35% between February 20 and March 23 in the most destructive sale since the Great Depression. But the global equity index rose 17.5% this quarter, on track for its biggest quarterly gain since the second quarter of 2009. (Chart: Global markets and two-quarter story, here)
Rising cases of COVID-19 continue to show signs of a second deadly wave of the pandemic, but markets still await a global economic recovery with the easing of blockade measures.
Los Angeles has become a new epicenter in the pandemic as coronavirus cases and hospitalizations increase despite California Governor Gavin Newsom’s orders requiring bars to close and residents to wear masks in nearly every Public spaces.
The World Health Organization (WHO) “will carefully read” a Chinese study of a new influenza virus found in pigs, a spokesman said, adding that the findings underscored the importance of influenza surveillance during the current pandemic.
“Asset markets are looking beyond COVID statistics,” said Neil Jones, head of currency sales at Mizuho Bank. “There is an expectation of containment and then later on, an expectation of some form of measure to combat the virus.”
US Federal Reserve Chairman Jerome Powell said Monday that the outlook for the world’s largest economy was “extraordinarily uncertain.” (Graph: World financial markets in 2020, here)
European stocks rose, with the Euro STOXX 600 rising 0.1% at 1102 GMT having been relatively in range for the past two weeks. Germany’s DAX rose 0.3%.
London’s FTSE 100 was down 0.6%. The British economy shrunk from 1979 to early 2020 when households cut spending, according to official data that included the first few days of closing.
Supported by quarter-end flows, the dollar rose to 97,722 against a basket of currencies, up 0.3% on the day.
“I would expect general demand for dollars to continue as we move forward in July,” said Neil Jones of Mizuho.
“If there is a summer hiatus, then we can see a massive sale of dollars in the election, but as we get closer to the end of the year, I would expect to see a resurgence in demand for dollars,” he added.
The euro was down around 0.3% against the dollar, at $ 1.1208, while the Australian and New Zealand dollars were also down.
Oil prices fell as traders made a profit after strong gains in the previous session and the Libyan state oil company marked progress in talks to resume exports, which could boost supply. Prices then partially recovered.
US crude oil fell 0.6% to $ 39.15 per barrel, having reached a low of $ 39.00, while Brent crude oil fell 0.6% to $ 41.16 per barrel.
China’s parliament passed national security legislation for Hong Kong in response to last year’s pro-democracy protests. The United States, Britain and other Western governments have said the legislation erodes the autonomy that was given to the city in its 1997 installment. Market reaction was limited.
Demand for safe German debt was little changed, with the 10-year government Bund yield at -0.478% DE10YT = RR.
Annual inflation in the 19 countries that share the euro accelerated to 0.3% in June from a four-year low of 0.1% in May, beating expectations of no change and supporting the European Central Bank’s expectation that a negative reading.
Elizabeth Howcroft’s Reports; Editing by Nick Macfie
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