Global stocks edge higher on stimulus hopes

Global equity benchmarks edged higher and gold soared to an all-time high on Monday as investors weighed expectations for another US stimulus package with concerns that rising tensions between the United States and China will slow the recovery of the global economy from the coronavirus pandemic.

Gold made a 1.6% jump to surpass its 2011 highs and put $2,000 per ounce in sight. Silver climbed 7.5%, to take its July streak past 30%, which would be its best month on record.

China took over the premises of the US consulate in the southwestern city of Chengdu on Monday, after ordering that the facility be vacated in retaliation for China’s ouster last week from its consulate in Houston.

US Secretary of State Mike Pompeo said Washington and its allies must use “more creative and assertive ways” to press the Chinese Communist Party to change its ways.

“US President (Donald) Trump used to say China’s President Xi Jinping is a great leader. But now Pompeo’s wording is becoming so aggressive that markets are starting to worry about further escalation,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

MSCI’s gauge of stocks across the globe gained 0.25% following mixed trading in Asia and broad declines in Europe after the United Kingdom imposed quarantine on travellers returning from Spain, which has seen an increase in coronavirus cases.

US stocks rebounded on Monday as investors shrugged off surging Covid-19 cases and US-China tensions, betting instead on more stimulus to revive a battered domestic economy ahead of a week packed with quarterly earnings reports.

At 10:56 am ET, the Dow Jones Industrial Average was up 134.48 points, or 0.51%, at 26,604.37, the S&P 500 was up 20.35 points, or 0.63%, at 3,235.98 and the Nasdaq Composite was up 125.71 points, or 1.21%, at 10,488.89.

Hopes for a quick US economic recovery are fading as coronavirus infections showed few signs of slowing. That means the economy could suffer without fresh support from the government, with some earlier steps such as enhanced jobless benefits due to expire this month.

Investors hope US Congress will agree on a deal before its summer recess. Concerns about the US economic outlook have also started to weigh on the dollar.

The dollar index dropped 0.5% to its lowest in nearly two years. The euro gained 0.5% to a 22-month high of $1.1725, continuing a winning streak since last week’s agreement on a 750-billion-euro post-pandemic EU recovery fund. Benchmark 10-year notes last rose 4/32 in price to yield 0.5774%, from 0.589% late on Friday.

Oil prices were capped on worries about the worsening Sino-US relations and both new and returning waves of the coronavirus around the world, which has now infected more than 16 million people and killed nearly 650,000.

US crude recently fell 0.85% to $40.94 per barrel and Brent was at $43.08, down 0.6% on the day.

Published in The Express Tribune, July 28^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.