Global stocks rally on corporate earnings
PHOTO: REUTERS
Gold pushed further past $2,000 on Wednesday in the face of a weak dollar and expectations of more stimulus measures for the pandemic-ravaged global economy, while stocks in Europe and on Wall Street rallied on encouraging corporate earnings.
Oil prices rose to their highest since early March on a big drop in US crude inventories and on the weak dollar, which was pushed lower by data showing euro zone business activity returned to modest growth in July.
The final Composite Purchasing Managers’ Index (PMI) from IHS Markit climbed to 54.9 from June’s 48.5, better than a 54.8 flash estimate, indicating significant improvement consistent with the continued easing of lockdowns, analysts said.
Gold set a new record after scaling $2,000 for the first time on Tuesday as investors seek a store of value on fears government stimulus in response to the pandemic will trigger inflation, devalue other assets and keep bond yields low.
Spot gold prices rose 1.53% to $2,049 an ounce, after earlier reaching a record $2,055.10.
The dollar standard of the past 50 years is under open question because of the increased money supply by the Federal Reserve, said Ryan Giannotto, Director of Research at alternative ETF provider GraniteShares. “The dollar is collapsing under the weight of $3 trillion in printed dollars,” Giannotto said.
Gold has gained nearly 35% so far in 2020 and is one of the year’s best-performing assets.
A surprise quarterly profit from Walt Disney Co and a spate of upbeat results from healthcare companies lifted sentiment on Wall Street. European shares also rose on the back of positive results.
MSCI’s benchmark for global equity markets rose 0.93% to 564.47. Emerging markets’ stocks rose 1.26%.
“Clearly, we have seen risk appetite rebound on global markets and sort of a return of the theme of a US underperformance relative to world counterparts,” said Karl Schamotta, Chief Market Strategist at Cambridge Global Payments in Toronto.
Published in The Express Tribune, August 6th, 2020.
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