Thursday, 19th May 2022
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Stocks advance as easing lockdowns spurs optimism

Easing lockdowns and hopes for economic recovery helped to lift European and US stock markets as well as oil prices on Tuesday.

NEW YORK, NY – MAY 08: People walk across from the Stock Exchange as the coronavirus keeps financial markets and businesses mostly closed on May 08, 2020 in New York City. The Bureau of Labor Statistics announced on Friday that the US economy lost 20.5 million jobs in April. This is the largest decline in jobs since the government began tracking the data in 1939. Spencer Platt/Getty Images/AFP

Easing lockdowns and hopes for economic recovery helped to lift European and US stock markets as well as oil prices on Tuesday.

However, fears of a second wave of coronavirus infections weighed on Asian equities and the dollar.

As some of the worst-hit countries — including eurozone members Spain, Italy and France — take heart from slowing COVID-19 death and infection rates, they are gradually allowing businesses to reopen.

Most European markets were higher in afternoon trading, while Wall Street’s main indices rose after the opening bell sounded. analyst Patrick J. O’Hare said there was not one particular piece of news pushing equities higher.

“Rather, it’s more of the same sentiment-driven action with links to reopening hope, monetary and fiscal policy support, the fear of missing out on further gains, and assumptions that things can only get better after having gotten so bad,” he said in a note to clients.

However sentiment was different in Asia over fears of a second coronavirus wave.

In Wuhan, the central Chinese city where the coronavirus outbreak first emerged, there have been reports of new infections, while South Korea announced its biggest spike in new cases for more than a month.

“A cluster of new cases… serves as a warning that the infection rates could spike again if lockdown measures are eased too quickly,” said Fawad Razaqzada, analyst at ThinkMarkets trading group.

Stock markets in Hong Kong, Sydney, Mumbai, Taipei, Singapore and Jakarta all closed down more than one percent Tuesday.

Tokyo and Shanghai only dipped 0.1 percent however, while there were gains in Wellington and Bangkok.

“While markets may eventually desensitise to mini-cluster outbreaks, provided death statistics remain static… at this stage, it does not lessen fears of a significant secondary spreader, which will undoubtedly weigh on consumer sentiment and hurt the rebound,” said AxiCorp analyst Stephen Innes.

He added that investors would have to expect such uncertainty until a vaccine for the virus is found.

Elsewhere Tuesday, oil prices jumped after Saudi Arabia said it would slash an extra one million barrels per day from its June output.

Kuwait and the United Arab Emirates also announced cuts after the pandemic caused global crude demand to plunge.

After last month’s historic collapse in oil prices to below zero, the commodity has shot higher in recent weeks after top producers already agreed to slash output by a combined 10 million barrels per day.

Stephen Innes, chief global markets strategist at AxiCorp, said traders were also positioning ahead of a data release.

“Besides the excellent optics a Saudi Arabia surprising supply curtailment provides, I do not think anyone wants to be too short ahead of today’s inventory data, especially if it indicates another drop. Hence oil prices finally rally today,” he said in a note to clients.

– Key figures around 1330 GMT –
London – FTSE 100: UP 1.1 percent at 6,003.74 points

Frankfurt – DAX 30: UP 0.2 percent at 10,846.83

Paris – CAC 40: DOWN 0.4 percent at 4,474.00

EURO STOXX 50: UP 0.1 percent at 2,887.63

New York – Dow: UP 0.6 percent at 24,376.12

Tokyo – Nikkei 225: DOWN 0.1 percent at 20,366.48 (close)

Hong Kong – Hang Seng: DOWN 1.5 percent at 24,245.68 (close)

Shanghai – Composite: DOWN 0.1 percent at 2,891.56 (close)

West Texas Intermediate: UP 6.3 percent at $25.65 per barrel

Brent North Sea crude: UP 2.8 percent at $30.47 per barrel

Euro/dollar: UP at $1.0875 from $1.0817 at 2040 GMT

Dollar/yen: DOWN at 107.36 yen from 107.65 yen

Pound/dollar: UP at $1.2347 from $1.2337

Euro/pound: UP at 88.08 pence from 87.65 pence