Encouraging Covid-19 vaccine trials help markets
Despite the ongoing rise in global virus cases, Asian equity markets saw their biggest daily rise in over two weeks overnight
London — World stocks rose for a fourth straight day on Thursday as encouraging coronavirus vaccine trials kept investors’ spirits up ahead of what was expected to be a record rebound in US jobs figures later.
Economists polled by Reuters expect a bumper 3-million US jobs to have been added in June on top of the 2.5-million created in May, and some generally reassuring data from both Asia and Europe this week.
Despite the ongoing rise in global virus cases, Asian equity markets saw their biggest daily rise in over two weeks overnight, aided by news that a vaccine being trialled by Pfizer and Germany’s BioNTech had been well tolerated in early-stage human tests.
Europe made a strong start, with banking, travel and carmaker stocks driving 1%-2% gains for its main bourses, and the euro helped back up towards $1.13 by another drop in the dollar.
“The big thing today is the US non-farm payrolls ... but by and large risk has been bid and the dollar has been weakening,” said RBC FX strategist Alvin Tan.
“What has really helped sentiment (in the last 24 hours) has been some of the preliminary results on a vaccine”.
A vaccine for Covid-19, which has now killed more than half a million people globally and sent the world economy into deep recession, has been long anticipated.
In a sign the positive sentiment will extend, E-minis for S&P 500 rose 0.8%, while bond markets were also favouring risk over safety.
The 10-year Germany Bund yield broke above -0.4% for the first time in a week in its biggest daily jump in a month after improved eurozone manufacturing data the previous day, while Portugal’s borrowing costs hit a 3-month low.
All major Asian indices had been upbeat. Japan’s Nikkei rose only fractionally, but China’s blue-chip index added 2% and Hong Kong’s Hang Seng jumped 2.8% as investors brushed off concerns over sweeping new security laws introduced by Beijing.
Jobs vs the virus
Attention was quickly turning to the US employment figures later that will feed debate on whether the world’s largest economy can sustain its fragile recovery in the face of rising Covid-19 cases in some key parts of the country.
“A better-than-expected outcome could go some way to settling the near-term debate that the US labour market will heal relatively quickly and justify new highs in US equities,” said Stephen Innes, strategist at AxiCorp.
In commodities, the most-traded August copper contract on the Shanghai Futures Exchange touched 49,570 yuan ($7,016.28) a tonne, its highest of the year.
Top copper consumer China posted better-than-expected manufacturing data in June, while US manufacturing activity rebounded and the factory sector in Germany contracted at a slower pace.
In Chile, where the number of Covid-19 cases have been climbing, miner BHP said it would begin to slow production at its small Cerro Colorado copper mine.
Oil prices climbed and gold eased as encouraging macro data prompted investors to take on more risk.
Brent crude climbed 30c to $42.37 a barrel. US crude rose 35c to $40.17 a barrel. US gold futures were 0.21% lower, at $1,776.20.
The dollar was largely unchanged against the Japanese yen at 107.45. The euro was higher at $1.1293, sterling rose to $1.2520 and the risk-sensitive Australian and New Zealand dollars were 0.3% and 0.5% stronger respectively.
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