Equities inch higher on hopes for recovery

Strong economic data from China, overshadow concerns

Reuters May 13, 2020
Representational image. PHOTO: REUTERS

NEW YORK: World equity markets inched higher and safe-haven bonds fell on Tuesday as stronger economic data from China and upbeat corporate earnings in Europe overshadowed concerns about a potential second wave of coronavirus infections.

Stock markets have rebounded sharply in recent weeks as the spread of the novel coronavirus was curbed in the largest economies of Asia and Europe, while parts of the US economy began to reopen after weeks of lockdowns.

“We have had a rally that has not been loved by everybody,” said Hans Peterson, Global Head of Asset Allocation at SEB Investment Management. “That rally might continue for a while longer, but we have probably gone on to a bit of a consolidation phase for now,” he said, as investors pause to assess how quickly the global economy can recover. MSCI’s gauge of stocks across the globe gained 0.39%, following modest advances in Europe and slight losses in Asia.

In early trading on Wall Street, the Dow Jones Industrial Average rose 149.05 points, or 0.62%, to 24,371.04, the S&P 500 gained 13.75 points, or 0.47%, to 2,944.07 and the Nasdaq Composite added 51.42 points, or 0.56%, to 9,243.77.

“Investors are more focused on the path ahead than the economic damage from the wake of the Covid-19 pandemic,” said Craig W Johnson, technical market strategist at Piper Sandler and Co, referring to the disease caused by the new coronavirus.

“While the fundamental fallout is historic, expectations remain low, and the fiscal and monetary policy response has been unprecedented.” China reported its first rise in car sales in 22 months and the removal of tariffs on some US imports as part of a Phase One agreement to ease trade tensions with the United States.

In Europe, mobile operator Vodaphone beat earnings expectations and maintained its dividend while Logistics group Deutsche Post said it saw business normalising in Europe.

Published in The Express Tribune, May 13th, 2020.

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