Stock markets firmer on lifting of virus restrictions

By: AFP      Published: 09:29 PM, 1 Jun, 2020
Stock markets firmer on lifting of virus restrictions

Global stock markets were firmer Monday, with Wall Street reversing opening losses on concerns over violent anti-racism protests across the country to focus on the continued easing of coronavirus restrictions.

Investors were also having to cope with simmering tensions with China over Hong Kong but hopes for some return to a semblance of normality was enough to allow the markets to move forward.

In New York, the Dow opened down 0.5 percent with the tech-heavy NASDAQ slipping 0.3 percent but by around 1600 GMT the market was in positive territory, showing modest gains.

Despite the protests, "history shows markets look through many sorts of tumultuous events and have done so for decades," Nicholas Colas of Datatrek Research said in a note.

"History shows there is simply no correlation between social/political turmoil and US stock market returns."

In Europe, London added 1.5 percent by the close, Madrid gained 1.8 percent, Milan rose 1.8 percent and Paris added 1.4 percent, while Frankfurt was shut for a holiday.

The euro was stronger against the dollar, extending gains as the lockdown easing gathered pace across the continent, hitting a two-month high of $1.1154 at one stage.

Beijing warned Washington on Monday of retaliation after US President Donald Trump announced restrictions on Chinese students in the United States in protest against a new national security law in Hong Kong.

However, Hong Kong led gains in Asia after Trump stopped short of imposing specific strict measures against China, suggesting the US prefers to avoid a confrontation at this point.

Violent anti-racism protests across the US meanwhile fuelled worries of a pick-up in virus infections, with some states making progress and others still seeing an increase in cases.

On Sunday night, police fired tear gas to try to disperse protesters outside the White House and scenes of violence were repeated in many major US cities.

'Investors ignoring risks' 

"Investors are continuing to largely ignore the escalating US-China tensions, the global recession and ongoing riots in the US, among other risks," said analyst Fawad Razaqzada at trading site ThinkMarkets.

"Sentiment remains supported due to the easing of lockdown measures and because of ongoing central bank support."

The COVID-19 outbreak is widely expected to push the world economy into deep recession this year despite vast stimulus from governments and central banks.

"After surging over the past two weeks, some might wonder where the next big driver for upside in Europe will come from," noted IG analyst Chris Beauchamp.

"But with an ECB (European Central Bank) meeting looming there is the potential for another boost to the central bank's easing programme, in tandem with the push at government level for a pan-eurozone recovery fund."

- Key figures around 1600 GMT -

London - FTSE 100: UP 1.5 percent at 6,166.42 points (close) 

Paris - CAC 40: UP 1.4 percent at 4,762.78 (close)

Frankfurt - DAX 30: CLOSED for public holiday

Milan - FTSE MIB: UP 1.8 percent at 18,523.71 (close)

Madrid - IBEX 35: UP 1.8 percent at 7,221.40 (close)

Tokyo - Nikkei 225: UP 0.8 percent at 22,062.39 (close)

Hong Kong - Hang Seng: UP 3.4 percent at 23,732.52 (close)

Shanghai - Composite: UP 2.2 percent at 2,915.43 (close)

New York - Dow: DOWN 0.5 percent at 25,245.30

Brent North Sea crude: DOWN 0.4 percent at $37.70 per barrel 

West Texas Intermediate: DOWN 1.8 percent at $34.86 per barrel 

Euro/dollar: UP at $1.112 from $1.110 at 2100 GMT 

Dollar/yen: DOWN at 107.57 yen from 107.83 

Pound/dollar: UP at $1.2468 from $1.2343 

Euro/pound: DOWN at 89.20 pence from 89.94 pence

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