Global Stocks Edge Higher on Optimism Over Economic Reopening--Update
May 25 2020 - 12:14PM
Dow Jones News
By Caitlin Ostroff and Joanne Chiu
Stocks ticked up in Europe and Asia Monday in a session with
light trading volumes as markets in the U.S. and U.K. remained
closed.
Futures tied to the S&P 500 climbed 1.2%, following a 3.2%
gain in the gauge last week after some states eased coronavirus
restrictions. The pan-continental Stoxx Europe 600 advanced
1.4%.
"Traders really don't know what outlook to take," said Ipek
Ozkardeskaya, senior analyst at Swissquote Bank. "If we don't hear
bad news on coronavirus -- like a second wave -- the recovery
should continue."
There are some early signs that the U.S. economy is starting
what's likely to be a slow and painful recovery, with air travel
and hotel bookings edging upward. For the first time since the
pandemic forced widespread U.S. business closures in March,
conditions in parts of the economy aren't getting worse, and might
even be improving.
Coronavirus-related deaths in the U.S. neared 100,000, prompting
officials to urge caution as Americans venture outside over the
holiday weekend. Authorities across the world remain on high alert
for a second wave of infections -- which could trigger another
round of lockdowns that further cripple the economy -- as
restrictions are eased in many regions. The Trump administration
imposed new travel restrictions on Brazil on Sunday after Covid-19
cases there rose sharply.
Among European equities, Bayer was one of the best performers.
The stock rose 8% following a report that the German chemical
company has made significant headway in settling lawsuits in the
U.S. related to its Roundup weedkiller. Shares in Deutsche
Lufthansa gained 6.2% following a report that the German government
reached an agreement with the airline on state aid.
Most major Asia-Pacific equity benchmarks closed higher on
Monday, with Japan's Nikkei 225 Index climbing 1.7% and the
Australian gauge advancing 2.2%.
Some markets were buoyed by optimism over economic reopening,
aided by encouraging signs in indicators such as mobility and
restaurant-booking data, according to Kerry Craig, global market
strategist at J.P. Morgan Asset Management.
However, there are reasons for caution, including uncertainty
about the pace of normalization, the potential for further cuts to
corporate profit forecasts, and rising tension between China and
trading partners including the U.S. and Australia, he said.
Traders are also paying close attention to renewed tensions
between the U.S. and China, especially over Hong Kong. On Sunday,
riot police fired tear gas and water cannons as protesters in Hong
Kong defied social-distancing rules to return to the streets and
vent anger at Beijing's plan to swiftly impose national-security
laws over the city. The Hang Seng Index, which on Friday logged its
worst day since July 2015, ended Monday up 0.1%.
There are renewed concerns about possible retreats by
international businesses from Hong Kong, given worries about issues
such as safety and freedom of speech, according to Stephen Innes,
chief global markets strategist at AxiCorp.
"Are we going to get more exodus of foreign employees and
possibly companies leaving Hong Kong? That's quite a concern," Mr.
Innes said. He said Beijing's initiative could also stoke further
U.S. criticism ahead of this fall's presidential election. "I think
this just gives [President] Trump more fodder to grandstand," he
said.
The Shanghai Composite Index was also little changed, after
declining 1.9% on Friday. Chinese Foreign Minister Wang Yi on
Sunday called for more cooperation with the U.S., saying American
politicians he didn't name "have taken U.S.-China relations hostage
and are pushing our two countries to the brink of a new Cold
War."
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Joanne
Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
May 25, 2020 11:59 ET (15:59 GMT)
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