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Europe stocks get travel boost, dollar slides on stimulus concern

Economy Aug 18, 2020 08:20AM ET
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2/2 © Reuters. A board displaying stock prices is adorned with the Australian Securities Exchange (ASX) logo in central Sydney 2/2

By Simon Jessop and Alun John

LONDON (Reuters) - Europe's blue-chip stocks rebounded on Tuesday, helped by gains for COVID-19-hit sectors such as travel and leisure, while the dollar slid on concern further U.S. fiscal stimulus could face political deadlock.

Despite the large amounts of recovery money sloshing around the system, the gains were cautious in thin holiday trade, with markets mindful of an escalating geopolitical tussle between China and the United States.

The reversal from early lows for the region's blue-chip euro STOXX 50, up 0.5%, was mirrored in U.S. stock futures, which rose 0.2%. That suggested Wall Street's broadest equity gauge could inch closer to a fresh record high, a day after a its sister index the Nasdaq hit its own milestone.

The early European weakness had followed a mixed picture in Asia overnight after a fresh instalment in the escalating spat between the United States and China.

Amid concern about the close ties between Beijing and Huawei Technologies Co, U.S. President Donald Trump announced further restrictions on the maker of mobile phones and other technology. He is seeking to limit the tech giant's access to commercially available chips, a move that is likely to disrupt global supply chains.

The early sea of red for European equities soon turned green, however, with German, Italian and Spanish stocks gaining 0.6%-0.9%, led by sectors including autos and the travel and leisure sector.

Britain's blue-chip FTSE 100, the region's biggest equity market, was also higher by late morning, up 0.4% but held back slightly by miner BHP Group (NYSE:BHP), which missed on profits and warned on slowing global growth.

One of those backing further gains for equity markets was Mark Hafaele, chief investment officer at UBS Global Wealth Management.

"We emphasize a positive outlook for risk assets, but advise investors that they may need to adjust their strategies to optimize their portfolio for the next phase of the recovery," he said in a note to clients.

"Adding risk exposure with markets at or near all-time highs can be daunting, but studies continue to show that time in the market is far more important than timing the market."

Investors had to balance the moves against Huawei with Trump's comments that China was meeting its obligations under the trade deal, pushing the Chinese currency to a more than five-month high against the greenback.

In other currency markets, the overarching theme was broadening dollar weakness, which weighed on European government bond yields and lifted the prices of alternative safe-haven assets such as gold.

The latest blow to the struggling dollar came from disappointing manufacturing and mortgage data, which led the greenback to hit a fresh 5-1/2 year low against the Swiss franc. It also neared a two-year low against a basket of its rivals, hit earlier this month. [FRX/]

In bonds, benchmark 10-year U.S. Treasuries were last down around 1 basis point at 0.6752. In Europe, German government bond yields held steady at a three-day low, ahead of flash PMI activity surveys on Friday.

In commodities, oil prices edged lower, giving up a slice of their recent gains after OPEC+ said the producer grouping was almost fully complying with output cuts.

Brent crude was down 15 cents, or 0.3%, at $45.22 a barrel, after gaining 1.3% on Monday. U.S. crude was down 0.5%, at $42.68 a barrel, having risen 2.1% in the previous session

Safe-haven gold closed higher after Berkshire Hathaway (NYSE:BRKa) also disclosed a stake in Toronto-based Barrick Gold (NYSE:GOLD) Corp, one of the world's largest mining companies.

Spot gold added 1.1% to once again breach the $2,000 an ounce barrier, trading at $2,007 an ounce.

Graphic: 2020 asset performance http://fingfx.thomsonreuters.com/gfx/rngs/COMMODITIES-ASSETS/010031B62XZ/index.html#section/assets

Graphic: World FX rates in 2020 http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html

Europe stocks get travel boost, dollar slides on stimulus concern
 

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Comments (7)
Andrew carson
Andrew carson Aug 18, 2020 9:55AM ET
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And then there is the US stimulus concern. The DNC (Do Nothing Convention) still holds us hostage due to their radical demands.
Plopseven Schwartz
Plopseven Schwartz Aug 18, 2020 9:55AM ET
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HOW ARE THEY BOTH RADICAL AND DO NOTHING
TL Chan
TL Chan Aug 18, 2020 1:13AM ET
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Simply a friendly entry price would not be enough to offset the strong cotrection pressure after is crazy mega overshoot in stock price, it was not normal price discovery, it is gambling, especially come from those who don't pay broker commission, where brokers just manulipulate in bumping up order traffic to earn money!
TL Chan
TL Chan Aug 18, 2020 1:03AM ET
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I am expecting over 100 points drop for after split TSLA share, as the chase is over, the gambling table close, see who get chairs after music stop!
TL Chan
TL Chan Aug 18, 2020 12:55AM ET
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Even at a much lower price level, TSLA has already priced in "Selling 6 millions cars in 2030, let the hedge funds give lessons to those greedy gamblers !
Irvin Mermelstein
Irvin Mermelstein Aug 17, 2020 9:46PM ET
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All Asia futures are down.
Leon Kelly
Leon Kelly Aug 17, 2020 9:25PM ET
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I'll believe it when i see green futures in the morning.
Dietmar Stahl
Dietmar Stahl Aug 17, 2020 9:10PM ET
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Tesla only has 6B revenue, P&G has three times more 17,5B.It's stock value has no relation to the earnings.
Plopseven Schwartz
Plopseven Schwartz Aug 17, 2020 9:10PM ET
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Tesla is modern day tulip mania.
 
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