World stocks rise on recovery hopes

Political developments across the globe inject tinge of caution into trading

LONDON: Europe’s shares added to their best gains in almost a month as safety plays lost their lustre on Wednesday, with hopes of a rapid economic recovery holding firm against a resurgence of global coronavirus cases.

Data showed US retail sales bounced back sharply in May, but new infections have hit record highs in six US states, and China has cut flights and closed schools to contain a fresh outbreak in Beijing.

The theme of a strong global economic rebound “will need to be balanced against the second wave Covid risks which are more difficult to assess, and we would argue investors have assumed to be perhaps more modest than in reality,” said MUFG’s head of research, Derek Halpenny.

Politics also lurked as a worry with India reporting 20 of its soldiers had been killed in clashes with Chinese troops at a disputed border site, while North Korea rejected a South Korean offer to send special envoys and said it would redeploy troops at the border.

That was enough to inject a tinge of caution into trading.

Japan’s Nikkei eased 0.5%, after jumping almost 5% on Tuesday for its biggest daily gain in three months.

Europe’s STOXX 600 trimmed its early gains too, but all the main indexes were still at least 0.6% higher, and US S&P 500 futures were up 0.5% after spending much of the Asian session wavering either side of flat.

Trial results announced on Tuesday showed dexamethasone, used to reduce inflammation in other diseases such as arthritis, reduced death rates by around a third among the most severely ill Covid-19 patients admitted to hospital.

MSCI’s broadest index of world shares crawled 0.2% higher, having climbed 2.2% the previous day to reclaim a good portion of the ground it lost in a relapse last week.  

Published in The Express Tribune, June 18^th, 2020.

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