World equities rise despite US-China tiff

Risk appetite grows on signs that global economic downturn has bottomed

NEW YORK: World stock markets hovered near three-month highs and safe-haven government bonds inched lower as risk appetite grew on signs that the global economic downturn has bottomed, despite worries over violent protests in the United States and unease over Washington’s standoff with Beijing.

US President Donald Trump left a trade deal with China intact Friday despite moving to end Washington’s special treatment for Hong Kong in retaliation for Beijing seeking to impose new security legislation on the city. China has asked state-owned firms to halt purchases of soybeans from the United States in response, two people familiar with the matter said.

“The Trump rhetoric against China and trade impediments against Hong Kong could have been a lot worse, hence the performance of those markets this morning, which has helped the risk backdrop,” said Chris Bailey, European strategist at wealth manager Raymond James.

MSCI’s gauge of stocks across the globe gained 0.78% following broad gains in Asia and Europe. The index is up more than 35% from its March lows.

Signs of a rebound from the global coronavirus lockdown helped bolster global equities and push safe haven assets lower.

France’s manufacturing activity rose in May as the country began to emerge from a nearly two-month coronavirus lockdown, pulling the sector out of a nosedive that had seen activity hit a record low a month earlier, a survey released on Monday showed.

An official business survey from China showed its factory activity grew at a slower pace in May but momentum in the services and construction sectors quickened.

US manufacturing activity eased off an 11-year low in May, though a full recovery from the Covid-19 crisis could take years because of high unemployment.

Published in The Express Tribune, June 2^nd, 2020.

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