Global markets are beginning to see light at the end of the tunnel.
World stock markets saw a second day of gains Tuesday as signs of progress in fighting the coronavirus in both Europe and the United States, along with the announcement of government stimulus packages, brought investors back in their droves.
There was also a boost for commodity markets as oil climbed nearly 2.5% on supply cut hopes, and a tumbling dollar saw the euro break out of a six-session pattern of falls.
The coronavirus has infected more than 1.3 million people and killed over 74,000 around the globe, and though the numbers are still rising in many emerging markets, improvements in the last few days have seen hopes rise.
Equities are enjoying the most significant gains. Japan’s Nikkei followed Wall Street’s 7% surge Monday with a 2% jump as its government announced a near $1 trillion stimulus package–the equivalent of a fifth of its GDP.
The pan-European STOXX 600 index climbed around 3% as markets in London, Frankfurt, Paris, Milan, and U.S. futures, all rebounded.
“We are trying to get clients to understand that (in market performance terms) better times ahead can come more quickly than you expected,” Jeff Mortimer, Director of Investment Strategy at BNY Mellon Wealth Management, told Reuters.
In badly-hit Italy and Spain, authorities have begun to consider easing lockdowns after steady drops in fatality rates, while in the United States, the daily number of deaths in the country’s worst-affected area, New York, has also shown signs of leveling off.
With market optimism on the rise, the U.S. dollar, which has been soaking up safe-haven flows for weeks, slipped against most major currencies.
The euro climbed 0.8% to $1.0880 to end a six-day run of falls, the pound climbed despite Britain’s Prime Minister Boris Johnson remaining in intensive care due to the virus, and the Australian dollar jumped over 1.5% to its highest point in a week.
“We’ve got a nice decline in volatility,” Kenneth Broux, FX strategist at Societe Generale, told Reuters. “We know central banks have done a very good job in alleviating the strain in dollar markets and that’s feeding through.
“(But) we need some time for this to settle … I think what we are seeing is a bit of mean reversion–a correction from exaggerated selling. We are in that process.”
