World stocks cheer ‘light at end of tunnel’
Easing lockdowns offset fears of renewed trade war between China and US
LONDON: Equities rallied on Tuesday as investors cheered a further easing of lockdowns in some countries, which offset fears of a renewed trade war between China and the United States.
Oil also rose as the economic outlook seemed to brighten. With signs that the spread of coronavirus is easing, governments in Europe and parts of Asia-Pacific as well as some US states have begun to allow businesses to reopen.
“Markets have reacted to the fact that it seems that there is a little light at the end of the tunnel,” Scope Markets analyst James Hughes told AFP.
“Lockdown easing in the likes of Spain and Italy has led to many looking at timelines for many aspects of life re-opening,” he said.
Key European markets were nearly 2% higher around two-thirds into their trading day while on Wall Street, the Dow Jones index was more than 200 points higher shortly after the opening bell.
“Even if the full return to normal life is not yet on the cards, the recent moves at least give many the senses that we are on the right path,” Hughes said.
The gains helped markets claw back some of Monday’s steep losses, though there remains a sense of fear of a second wave of infections, as traders also contemplate a long recovery from the economic destruction.
Hong Kong closed higher on news that some restrictions would be lifted in the city, outweighing data showing its economy suffered its worst contraction on record in the first quarter. Dealers were keeping tabs on China-US relations after Donald Trump hit out at Beijing over its handling of the outbreak, saying it began in a Wuhan lab, but so far offering no evidence.
The comments, and his warning he could hit China with fresh tariffs; have fanned fears of a repeat of the standoff between the economic superpowers that battered markets last year.
Published in The Express Tribune, May 6th, 2020.
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